[alexosnasos2]

The Australian and New Zealand dollars fell ahead of U.S. figures tomorrow forecast to show retail sales rose, reducing the case for additional Federal Reserve stimulus measures.

The Federal Open Market Committee meets tomorrow to set monetary policy. New Zealand’s dollar declined against the yen, halting a three-day advance, after Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, cut its milk price target. The so-called Aussie weakened against most of its 16 major peers before a report tomorrow economists expect to show Australia’s home loans declined.

“A positive retail number in the United States, and something above expectation in particular, could be supportive of the U.S. dollar and negative for the Australian dollar,” said Hans Kunnen, Sydney-based chief economist at St. George Bank Ltd. Lower milk prices are “not helpful for the New Zealand dollar. Commodity prices and attitudes towards nations that are linked into Asian growth have weakened a touch.”

Australia’s dollar weakened 0.4 percent to $1.0536 as of 2:40 p.m. in Sydney from March 9, when it declined 0.6 percent. The Aussie fell 0.7 percent to 86.65 yen. New Zealand’s dollar declined 0.4 percent to 81.80 U.S. cents. It dropped 0.7 percent to 67.27 yen.

U.S. Retail Sales
Retail sales in the U.S. probably increased 1.1 percent in February, the most in five months, according to the median estimate of economists in a Bloomberg News survey before the Commerce Department releases the figures tomorrow.

Fed Chairman Ben S. Bernanke said on Jan. 25, after the FOMC’s last meeting, that policy makers were considering additional asset purchases to boost growth. The Fed has pledged to keep its benchmark rate at almost zero through at least late 2014 and has previously purchased $2.3 trillion of securities in two rounds of so-called quantitative easing.

Auckland-based Fonterra revised its forecast price for milk to NZ$6.35 ($5.20) per kilogram of milk solids, from a NZ$6.50 estimate in December, the company said in a statement today.

In Australia, the number of loans granted to build or buy houses and apartments probably fell 0.1 percent in January from the previous month, according to median estimate of economists surveyed by Bloomberg before the data are released tomorrow.

“We have a mild bias to the weakness in the Australian dollar on the back of softer commodity prices and our view that there is still potential for a rate cut in Australia because we are growing below trend,” Kunnen said.

The Thomson Reuters/Jefferies CRB Index (CRY) of raw materials has fallen 1.5 percent so far this month.

RBA Rates
The Reserve Bank of Australia on March 6 held its benchmark interest rate unchanged at 4.25 percent, in line with the estimates of 25 economists surveyed by Bloomberg.

A Credit Suisse Group AG index based on swaps indicates traders are betting Australia’s central bank will lower rates by 53 basis points, or 0.53 percentage point, over the next 12 months.

Futures traders decreased their bets that the Australian dollar will gain against its U.S. counterpart. 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 61,720 on March 6, according to the Washington-based Commodity Futures Trading Commission. That compared with net longs of 78,201 a week earlier.

Australia’s government bonds advanced, pushing the yield on the 10-year security down nine basis points to 3.92 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell three basis points to 3.01 percent.