The New Zealand and Australian dollars were the second and third-worst performers, respectively, among the 16 most-active currencies against the U.S. dollar on speculation that slowing economic growth will spur their central banks to cut interest rates. Traders also sold New Zealand's currency as the yield spread between 10-year New Zealand and U.S. government bonds narrowed to the least in almost eight months.
Australia's dollar dropped to 97.07 U.S. cents at 12:53 p.m. in Sydney from 97.60 cents late in Asia yesterday. It reached a 25-year high of 98.49 cents on July 16, and headed for a fifth weekly advance, its longest winning run since Oct. 12. The currency traded at 103.23 yen from 102.95 yen.
New Zealand's dollar declined 0.8 percent to 76.28 U.S. cents. It touched a six-week high of 77.60 cents on July 16, and was poised for a second weekly advance. The currency bought 81.10 yen, from 81.09 yen.
The Australian dollar fell to as low as 96.78 cents, the weakest since July 15, after the UBS Bloomberg Constant Maturity Commodity Index of 26 commodities dropped 2.1 percent, taking its loss this week to 6 percent.
Commodity prices influence the Australian and New Zealand dollars because raw materials account for 60 percent of Australia's exports, while sales of commodities including lumber make up 70 percent of New Zealand's overseas shipments.
Rising dairy prices fanned the terms of trade index, which measures the amount of imports New Zealand can buy from a fixed quantity of exports, to a 24-year high in the first quarter, according to government data.
The Australian currency's decline began this week after Reserve Bank of Australia Glenn Stevens signaled on July 16 that borrowing costs were high enough to curb rising prices. Minutes from the RBA's July 1 meeting released on July 15 showed current policy was ``exerting the appropriate degree of restraint.''