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Aussie, N.Z. Dollars Weaken on Interest-Rate Outlook

The Australian and New Zealand dollars fell against most of their major peers after slowing consumer-price inflation in Australia increased bets the nation’s central bank will lower interest rates.

The Aussie dollar touched a two-week low against its U.S. counterpart even as global stocks and commodities rose following better-than-expected U.S. economic data and successful bond auctions in Europe. Both South Pacific currencies weakened for a second day versus the greenback.

“Commodity currencies have been a bit softer because you had a weak Australian CPI number overnight,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc, by phone from London. “The big picture driver is likely to be growth this year.”

The Australian dollar dropped as much as 0.7 percent to $1.0247 yesterday in New York, the lowest level since April 11, before trading little changed at $1.0315. The Aussie rose 0.1 percent to 83.88 yen after sliding 1.1 percent earlier.

New Zealand’s dollar was little changed at 81.32 U.S. cents after falling earlier as much as 0.5 percent. It rose 0.1 percent to 66.12 yen.

Australia’s consumer price index rose 0.1 percent from the previous quarter, the Bureau of Statistics said yesterday in Sydney, compared with a 0.6 percent gain forecast in a Bloomberg News survey. It was unchanged in the fourth quarter.

The Reserve Bank of Australia has signaled it may be willing to lower its benchmark interest rate from 4.25 percent to bolster the economy, provided prices remain in check. A Credit Suisse Group AG index based on swaps indicates traders expect 109 basis points, or 1.09 percentage points, of cuts over the next 12 months, compared with 98 points yesterday.

The Standard & Poor’s 500 (SPX) Index advanced as much as 0.6 percent before trimming the gain to 0.4 percent, and the Thomson Reuters/Jefferies CRB Index of raw materials added 0.3 percent. Yields on Spanish, Italian and Dutch bonds fell after the nations sold debt yesterday.

To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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