The New Zealand dollar slipped against its Australian counterpart after the Reserve Bank of Australia didn't complain about the elevated level of the Aussie yesterday as much as expected, encouraging traders to push it higher.
The kiwi touched a week low of 92.29 Australian cents, and was trading at 92.38 cents at 8am in Wellington from 92.75 cents at 5pm yesterday. The local currency rose to 87.71 US cents from 87.67 cents yesterday after failing to break through 88 cents with a high of 87.91 cents.
The Australian dollar outperformed other major currencies overnight, rising above 95 US cents for the first time since November. Australia's central bank yesterday kept its benchmark interest rate at 2.5 percent as expected but didn't complain about the high level of the currency as much as expected, lamenting that the currency was high by historical standards, particularly given declines in key commodities and was offering less assistance in achieving balanced growth.
"It's essentially them saying the high Aussie dollar is a nuisance. They are not even saying it is a threat or that they are prepared to do anything about it," said Peter Cavanaugh, client adviser at Bancorp Treasury Services. "They have toned down their language a little bit and in the current environment with the global hunt for yield it gave the Australian dollar a boost."
Also underpinning the Aussie, reports on Chinese manufacturing yesterday printed stronger than expected, boosting optimism about exports to the country's largest trading partner.
Weighing on the kiwi, dairy product prices fell to the lowest level since January 2013 in Fonterra Cooperative Group's latest GlobalDairyTrade auction overnight. The GDT price index fell 4.9 percent to US$3,595 a tonne, the ninth decline in the last 10 auctions.
Today, the focus will be on the ANZ Commodity Price Index scheduled for release at 1pm.
The kiwi touched a week low of 51.02 British pence after a better-than-expected UK Manufacturing Purchasing Managers' Index boosted expectations the Bank of England may have to hike rates sooner than anticipated. The local currency was trading at 51.14 British pence at 8am from 51.24 pence yesterday.
The New Zealand dollar advanced to 64.13 euro cents from 64.05 cents yesterday after the Eurozone PMI fell to 51.8 in June from 52.2 in May and its lowest level since November.
The local currency rose to 89.07 yen from 88.92 yen after the Tankan survey of Japanese business conditions showed weakness in the nation's economy, fuelling speculation the Bank of Japan will ease policy further. The trade-weighted index was recently little changed at 81.23 from 81.25 yesterday.
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