By Candice Zachariahs Feb. 1 (Bloomberg) -- Australia’s dollar traded near its lowest in more than a month as speculation the global economic recovery may slow prompted traders to pare expectations of an interest-rate increase when the central bank meets tomorrow. New Zealand’s currency was near its lowest level since Dec. 23 after an index of commodity export growth slowed in January and as concern over Greece’s budget problems damped demand for higher-yielding assets. The odds that the Reserve Bank of Australia will increase its benchmark rate to 4 percent at its next meeting fell to 71 percent from 78 percent on Jan. 28, according to a Credit Suisse Group AG index based on swaps. “Markets are getting very nervous about the whole growth recovery story with the problems associated with Greece’s fiscal issues refusing to go away,” said Khoon Goh, senior economist at ANZ National Bank Ltd. in Wellington. “Market pricing has been pared back with a lot of people nervous about whether or not the RBA will pause.” Australia’s dollar fell 0.1 percent to 88.26 U.S. cents as of 4:28 p.m. in Sydney after touching 87.89 cents, the least since Dec. 24. The currency slid to 79.54 yen from 79.78. New Zealand’s dollar bought 70.09 U.S. cents after earlier falling as low as 69.98 cents, the weakest since Dec. 23, and from 70.10 cents in New York. It fetched 63.19 yen from 63.28. Declines in Australia’s dollar were limited as a report showed house prices rose in the fourth quarter by the most in more than six years. An index measuring the weighted average of prices for established houses in the eight capital cities climbed 5.2 percent, the Australian Bureau of Statistics said today. Economists had forecast a 3.5 percent gain. Rates, Futures The Australian dollar will likely find buyers at 88 U.S. cents and then 87 cents, while New Zealand’s currency will find support near 70 cents, Goh said. Benchmark interest rates are 3.75 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’ assets. The risk in such trades is that currency market moves will erase profits. All 20 economists in a Bloomberg News survey expect the Reserve Bank of Australia to raise interest rates tomorrow. “We expect the RBA will hike 25 basis points to 4 percent on Tuesday,” said John Kyriakopoulos, head of currency strategy in Sydney at National Australia Bank Ltd. “We continue to see falls in the Australian dollar below 90 cents as buying opportunities.” Futures traders reduced their bets that the Aussie dollar will gain against the U.S. dollar, figures from the Washington- based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the Australian dollar compared with those on a drop -- so-called net longs -- was 45,318 on Jan. 26, the least since Dec. 29. N.Z. Commodities, Bollard An index of New Zealand’s commodity export prices climbed 0.4 percent in January after gaining 2.6 percent the previous month, ANZ National Bank Ltd. said today. The so-called kiwi dollar earlier gained after the Dominion Post reported that central bank Governor Alan Bollard said “meaty” interest rates increases may be needed if the bank starts to see inflation pressures. “There could be some meaty chunks on the upside,” for interest rates, Bollard said on Jan. 29, according to a Dominion Post report last updated on Jan. 30. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was unchanged at 4.40 percent. Australian government bonds were little changed with the yield on 10-year notes at 5.39 percent, according to data compiled by Bloomberg. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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