By Candice Zachariahs Dec. 8 (Bloomberg) -- The Australian dollar was little changed, after four days of losses, on concern central bank Governor Glenn Stevens may damp expectations for further interest rate increases after raising borrowing costs a record three-straight months. New Zealand’s dollar fell for a second day against the yen after Asian stocks pared gains, curbing investor appetite for higher-yielding assets. Governor Stevens said Dec. 1, policymakers’ “material adjustments” to the target rate are enough to keep inflation within his 2 percent to 3 percent target range. He will address the Australia Business Economists Annual Forecasting Dinner at 8:25 p.m. in Sydney today. The market is “possibly looking for some softer rhetoric and a hint that we’re getting closer to a neutral level for rates,” said Jim Vrondas, a Sydney-based manager at the online foreign-exchange dealer OzForex. “There could be some good opportunities this week to buy the Australian dollar at 90 cents or a touch lower.” Australia’s dollar traded at 91.40 U.S. cents as of 3:27 p.m. in Sydney from 91.27 cents in New York yesterday. The currency fell 0.5 percent to 81.31 yen. New Zealand’s dollar fetched 71.50 U.S. cents from 71.33 cents and traded at 63.62 yen from 63.84 yen. 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 percent 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. Sentiment Gains The Australian dollar gained earlier after National Australia Bank Ltd. said its business sentiment index climbed 3 points to 19, the highest level since May 2002. The survey, released today, was based on interviews with more than 540 companies between Nov. 23 and Nov. 27, and a figure above zero shows optimists outnumber pessimists. Optimism about Australia’s economy waned after the Bureau of Statistics said the nation’s current account deficit widened in the three months through September as exports of iron ore and coal fell and imports rose. The shortfall on goods, services and investment grew to A$16.18 billion ($14.8 billion) from a revised A$13.1 billion in the second quarter. A drop in earnings from shipments of iron ore, coal and farm goods helped slash 1.8 percentage points from gross domestic product last quarter, the government report showed. “On balance the data was weaker than expected with the much larger than expected contraction from net exports, dampening expectations for a bumper GDP number next week,” Anthony Thompson, a senior economist at Westpac Banking Corp. in Sydney, wrote in a research note. The third-quarter GDP report will be released on Dec. 16. N.Z. Manufacturing New Zealand’s currency pared gains on a report showing manufacturing sales volumes fell for the sixth time in seven quarters and construction shrank. Manufacturing sales adjusted to remove inflation dropped 1.4 percent in the third quarter from the previous three months, Statistics New Zealand said. Home construction shrank for an eighth straight quarter, the agency said in a separate report. The Reserve Bank of New Zealand is forecast to leave its target rate unchanged at a record low when it meets Dec. 10, according to all 13 economists in a Bloomberg News survey. “Going into Thursday’s RBNZ decision the kiwi will probably struggle toward 72.50 to 73 cents and be a sell on rallies,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We need to see a daily close below 70.80 to suggest the downward momentum is actually gaining traction.” Bonds Fall Australian government bonds fell, pushing the yield on 10- year notes up by eight basis points, or 0.08 percentage point, to 5.51 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.549, or A$5.49 per A$1,000 face amount, to 98.103. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was unchanged at 4.39 percent. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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