For the third day, Australian dollar had weakened after the country’s central bank left interest rates unaltered and China’s manufacturing expanded at slower rate on May,toning down demand for the South Pacific nation’s assets.

New Zealand dollar had declined on speculation efforts to minimize budget deficits in Europe will not hasten the region’s growth and after Germany’s President quit surprisingly, leaving added  to pressures on Angela Merkel, the German Chancellor.

Glenn Stevens,Governor of the Reserve Bank of Australia said monetary policy was “appropriate for the near term” and kept the overnight cash rate target at 4.5 percent today.

“The RBA acknowledges that there’s been a little more uncertainty created by events in Europe,” stated David Forrester, a currency economist at Barclays Capital in Singapore. Germany’s “political uncertainty is bad for the euro and bad for risky assets in general in the near term as it increases the uncertainty around potential future policy action.”

Australian dollar decreased to 83.89 U.S. cents as of 4:37 p.m. in Sydney from 84.59 cents in New York yesterday and 83.65 cents before the central bank’s decision. The currency declined 0.9 percent to 76.53 yen.

New Zealand’s dollar declined by  0.6 percent to 67.67 U.S. cents. It bought 61.73 yen from 62.11 yen.

“Investors should buy the Australian dollar between 80 and 82 U.S. cents”, said Forrester. Barclays Capital forecasts the RBA will raise the benchmark rate to 5.25 percent by the end of the year.

Higher benchmark interest rates in Australia and New Zealand’s 2.5 percent, compared with 0.1 percent in Japan and as low as zero in the U.S.,  will most likely attract investors to the South Pacific region’s higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

The Aussie fell against 14 of its 16 most-traded counterparts as RBA Governor Stevens signaled policy makers may keep borrowing costs steady in coming months as the bank assesses the impact of the most aggressive rate increases in the Group of 20.

The number of permits conceded to build or renovate houses and apartments in Australia dropped 14.8% last April, the Bureau of Statistics said in Sydney today. The median estimate of 20 economists surveyed by Bloomberg was for a decline of 5 percent. An independent report showed retail sales increased on April at twice the pace estimated by economists.

“The mixed domestic data and global uncertainty is making it difficult for the RBA to say too much at this juncture,” said  the Senior Economist, Su-Lin Ong, at RBC Capital Markets Ltd. in Sydney. That “also supports a pause in the tightening cycle.”

China is Australia’s largest trading partner and New Zealand’s second-biggest export market.

Decrease in New Zealand’s currency were limited as a Credit Suisse Group AG index showed swaps traders were betting on a 78% chance that New Zealand’s central bank will increase the benchmark interest rate from a record low on June 10.

New Zealand’s two-year swap rate, is a fixed payment made to receive floating rates, increased from 4.39 to 4.40 percent yesterday.

Australian bond futures rose, with the 10-year contract for June delivery gaining to 94.66 on the Sydney Futures Exchange from 94.63 yesterday. The implied yield on the futures stood at 5.34 percent. The implied yield on three-year futures was 4.77 percent.