The Australian dollar halted yesteday’s gain after a report showed the nation’s trade balance unexpectedly turned to a deficit.

The New Zealand dollar headed for the biggest five-day drop in two months against the yen after central bank Governor Alan Bollard said an interest-rate cut is a possibility if currency strength undermines growth. Losses in the South Pacific currencies were limited on speculation a report today will show inflation in China cooled last month, providing the People’s Bank of China more leeway to ease monetary policy.

Trade balance data “looks like a weak number, and it’s putting some downward pressure on the Australian dollar,” said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. “This would certainly add to the weaker tone in economic data in the past two weeks.”

The Australian dollar fell 0.1 percent to $1.0632 as of 12:11 p.m. in Sydney from yesterday when it jumped 0.6 percent. On the week, it’s retreated 0.9 percent. The so-called Aussie was little changed at 86.78 yen from yesterday, when it strengthened 1.2 percent.

New Zealand’s dollar was little changed at 82.44 U.S. cents from yesterday, when it rose 1 percent. The so-called kiwi bought 67.28 yen from 67.23 yesterday, when it jumped 1.5 percent. It is headed for a 0.8 percent drop this week, the biggest decline since the week ended Dec. 30.

Australian imports outpaced exports by A$673 million ($715 million), from a revised A$1.33 billion surplus in December, the Bureau of Statistics said in a report in Sydney today. The median estimate in a Bloomberg News survey of 24 economists was for a surplus of A$1.5 billion.

The data added to pressure on central bank Governor Glenn Stevens to end a two-month pause in interest-rate cuts after the economy slowed last quarter and payrolls fell in February.

RBNZ Policy

Reserve Bank of New Zealand Governor Bollard yesterday kept the cash rate at a record low 2.5 percent in line with expectations of economists surveyed by Bloomberg. A rate cut is “not something we’re looking at the minute, but it’s completely a possibility,” Bollard said in an interview on Television New Zealand’s Breakfast today.

He said the New Zealand dollar’s gain the past 12 months is undermining economic growth, inhibiting exports and that sustained currency gains would reduce the need for further rate increases.

Card Spending

The value of transactions on electronic cards declined 0.7 percent last month from January, when it gained a revised 1.1 percent, Statistics New Zealand said today in Wellington. Economists expected a 0.1 percent increase, according to the median of five estimates in a Bloomberg survey.

China’s consumer prices probably rose 3.4 percent last month from a year earlier, after a 4.5 percent increase in January, according to the median estimate of economists before the government releases its figures today. Producer-price inflation rose 0.1 percent in February from a year earlier after a 0.7 percent increase the previous month, a separate Bloomberg poll showed. China is Australia’s biggest trading partner and New Zealand’s second-largest export market.

“The expectation is for the softening of the rate of inflation in China,” said Andrew Salter, a strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Sydney. “That’s going to allow PBOC scope to ease monetary policy further to bring about a soft landing in the Chinese economy and that should be supportive of the Aussie dollar and New Zealand dollar.”

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