By Candice Zachariahs Nov. 5 (Bloomberg) -- New Zealand’s dollar fell, ending a three-day advance, as the jobless rate rose to the highest level in more than nine years and central bank governor Alan Bollard said the nation’s recovery will be slower than Australia’s. The Australian dollar also weakened as Asian equities declined, damping demand for higher-yielding assets. New Zealand’s unemployment rate rose to 6.5 percent in the third quarter, the most since the three months ended March 31, 2000, Statistics New Zealand said today. “The numbers are genuinely weak and weaker than both the market and the Reserve Bank of New Zealand had factored in and it certainly justifies a lower kiwi,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “There’s certainly no reason based on these numbers for the central bank to bring forward its tightening cycle.” New Zealand’s dollar fell 0.6 percent to 71.96 U.S. cents as of 5:16 p.m. in Wellington from 72.60 cents before the jobless number was released and 72.42 cents in New York yesterday. It dropped 1 percent to 65.04 yen. Australia’s currency declined 0.4 to 90.62 cents from 90.99 cents in New York yesterday and fell 0.8 percent to 81.93 yen. New Zealand’s dollar will find support at 71.50 U.S. cents, while the Australian dollar will be bought near 89.80 cents, Jones said. Bets on Rates “New Zealand has had a recession, and the pick-up is slower and more vulnerable,” than Australia, Governor Bollard said in an e-mailed statement based on a speech in Auckland. It’s “a difference financial markets do not appear to appreciate.” New Zealand’s economy expanded 0.1 percent in the second quarter, ending the nation’s worst recession in three decades. The kiwi has been the best performer against the greenback among the 16 most-traded currencies over the past six months as traders bet its central bank will raise interest rates. Australia’s dollar has put in the third-best performance. Swaps traders are betting Bollard will increase the official cash rate by about 2 percentage points over the next 12 months, according to a Credit Suisse index. A separate index shows bets for 160 basis points in increases from the Reserve Bank of Australia, which has increased its target rate 50 basis points since October. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 4.46 percent after falling for eight sessions. Benchmark interest rates are 3.5 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. Australian Trade, FOMC Demand for Australia’s dollar was bolstered after the nation’s trade deficit widened by less than economists forecast. The shortfall swelled to A$1.85 billion ($1.68 billion) from a revised A$1.65 billion in August. The median estimate in a Bloomberg survey was for a A$2.15 billion gap. “The trade deficit was smaller than we had been anticipating and reduces the risk of a negative third-quarter GDP print in mid-December,” Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney, wrote in a note to clients. The numbers are “modestly supportive of the Australian dollar and may weigh slightly on bonds.” Australia’s government will sell between A$32 billion and A$34 billion of bonds through to the end of the fiscal year, the Australian Office of Financial Management said today on its Web site. That will take total issuance for the year to June 30, 2010 to at least A$50 billion, down by as much as A$10 billion from previous estimates. U.S. Employment Both South Pacific currencies rose yesterday as Fed officials kept the target overnight lending rate at zero to 0.25 percent, where it has been since December, and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. The U.S. Labor Department on Nov. 6 will report that the jobless rate rose to 9.9 percent in October, from 9.8 percent the previous month, as companies cut another 175,000 jobs, according to median forecasts in Bloomberg surveys of economists. Australian government bonds rose. The yield on 10-year notes fell four basis points, or 0.04 percentage point, to 5.56 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 gained 0.268, or A$2.68 per A$1,000 face amount, to 97.750.

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