May 13 (Bloomberg) -- The Australian dollar headed for a second losing week, sliding to its lowest in almost a month, as prices of the country's commodity exports such as copper plummeted, raising concern revenue from overseas sales will drop.

Australia's dollar is closely correlated to the prices of metals such as copper, which fell to a seven-week low, because almost 60 percent of the country's exports are raw materials. Losses in the currency were compounded by a stronger-than- expected U.S. retail sales report yesterday, which prompted concern U.S. interest-rate increases will accelerate, eroding Australia's yield advantage.

``Weaker commodity prices will be a big drag on Australia's balance of payments,'' said Richard Franulovich, a New York-based currency strategist at Westpac Banking Corp. ``I'd expect some more weakness in the Australian dollar.''

Australia's currency fell to 76.59 U.S. cents at 1:07 p.m. in Sydney from 77.14 cents in late Asia yesterday, and traded as low as 76:43 cents, the weakest since April 19. It will probably drop to 76 cents in the next two trading days, Franulovich said.

Gains in commodity prices helped Australia's currency climb 40 percent in the past three years. Exports contribute about 20 percent to the country's economy.

The Reuters-Commodity Research Index of 17 commodities Futures yesterday dropped 1.6 percent to 296.02, the lowest since Feb. 22, and 8 percent below its March 16 all-time high.

Copper futures for July delivery fell 4.6 percent, to $1.376 a pound on the Comex division of the New York Mercantile Exchange. Gold futures lost 1.6 percent.

`Additional Pressure'

``A plunge in gold futures to three-month lows and the drop in the CRB index is putting additional pressure on commodity currencies, especially the Australian dollar,'' London-based Monica Fan, global head of foreign exchange strategy at RBC Capital Markets, said from the firm's Sydney office. It may find support at 76.12 cents, the Feb. 12 low, she said.

Some traders use previous lows as an indicator of support, or a level where they expect buying. They may buy or sell currencies based on support rates they expect it won't fall below, or resistance levels they predict the currency won't exceed.

A decline below the April 5 low of 76.30 cents may trigger a further slide to about 75.60 cents, a level based on the average closing price over the past 200 days, said John Kyriakopoulos, a currency strategist at National Australia Bank Ltd. in Sydney.

Australia's dollar has lost 1.8 percent versus its U.S. counterpart since the start of the year.

`Steady Hand'

The local dollar dropped more than half a U.S. cent immediately after a U.S. government report yesterday showed retail sales climbed 1.4 percent, twice the median forecast in a Bloomberg News survey, after a revised 0.4 percent gain in March.

A strengthening U.S. economy may add to speculation U.S. rates will rise at a faster pace.

The Federal Reserve has pushed up its interest-rate target for overnight loans between banks eight times since June to 3 percent, while the Reserve Bank of Australia has raised its overnight cash rate target once in 17 months to 5.5 percent.

``A steady hand from the Reserve Bank and the possibility of a more aggressive Fed can only put pressure on that relative yield attractiveness,'' David de Garis, senior treasury economist Australia & New Zealand Banking Group Ltd., said in Melbourne. The currency will fall to 66 cents by year-end, he said.

Australian government bonds gained for a third day. The 6.25 percent bond maturing in April 2015 climbed 0.236, or A$2.36 per A$1,000 face amount, to 107.22. The yield fell 3 basis points to 5.3 percent, 1.14 percentage points above like-dated U.S. Treasury notes versus 1.16 percentage points yesterday. A basis point is 0.01 percentage point.

To contact the reporter on this story: Chris Young in Sydney at cyoung12@bloomberg.net

Last Updated: May 12, 2005 23:09 EDT