Much stronger than expected Australian GDP data saw the Aussie dollar flex its muscles against the kiwi and other currencies today.
The kiwi closed sharply weaker at A81.52c compared with A82.15c yesterday. The Australian dollar rose to US95.57c against the greenback from US95.46c yesterday despite the US dollar's
general strength.
Economists said data showed Australia's economy expanded at a robust 3.6 per cent annual rate in the first quarter, keeping alive expectations for higher interest rates in the future.
Against the kiwi and other currencies, the US dollar held big gains scored the previous day when Federal Reserve Chairman Ben Bernanke issued an explicit warning about the inflationary threat from a weak US currency.
Dr Bernanke said the weak US dollar was adding to price pressures and the Fed along with the US Treasury was carefully monitoring currency markets, suggesting greater concern in Washington about the dollar and the potential for dollar-supportive intervention.
Dr Bernanke's comments also suggested the Fed was unlikely to cut interest rates further from 2 per cent, and investors were looking for the Fed's next move to be a rate increase later in the year.
The kiwi closed on US77.78c from US78.38c yesterday.
Direction will depend on the tone of Reserve Bank governor Alan Bollard's comments tomorrow at his quarterly review of interest rates. No one expects the cash rate to be changed and most interest will centre on how dimly he views the Government's expansionary budget announced on May 22.
The trade weighted index fell to 69.68 from 69.93.
Reuters currency rates:
NZ dlr/US dlr US77.78c US78.38c
NZ dlr/Aust dlr A81.52c A82.15c
NZ dlr/euro 0.5046 0.5050
NZ dlr/yen 81.99 81.84
NZ dlr/stg 39.69p 39.96p
NZ TWI 69.68 69.93
Australian dollar US95.57c US95.46c
Euro/US dollar 1.5446 1.5531
US dollar/yen 105.19 104.37
- NZPA
