Australia’s dollar rallied to the strongest in a week versus the dollar after the central bank lowered interest rates less than some forecasts yesterday.
The Aussie gained for a second day before a report projected to show the nation’s economy expanded at the fastest annual rate in four years in the first quarter. New Zealand’s currency rose against the yen as global stocks advanced.
“There are still a lot of concerns in the market, but central banks are coming in and taking measures to ease conditions, so we’re seeing less of a deterioration in risk than recently,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York.
Australia’s dollar rose 0.1 percent to 97.42 U.S. cents as of 5 p.m. in New York yesterday. It touched 98.04 U.S. cents, the strongest since May 30. The Aussie added 0.7 percent to 76.72 yen.
New Zealand’s dollar was little changed at 75.61 U.S. cents and the kiwi gained 0.5 percent to 59.55 yen.
The Reserve Bank of Australia cut interest rates by 0.25 percent to 3.5 percent. Swaps data compiled by Bloomberg had shown a more than 40 percent chance of a reduction to 3.25 percent.
“With a further reduction in rates from the RBA likely at future policy meetings, we would view Aussie-dollar strength as short opportunities and look to fade rallies,” Viloria wrote to clients today.
The Standard & Poor’s 500 Index (SPX) rose 0.6 percent. The S&P GSCI Index of 24 raw materials gained 0.1 percent.
Australia’s gross domestic product rose 3.3 percent in the three months through March from a year earlier, according to the median estimate in a Bloomberg News survey of 24 economists. That would be the biggest increase since the first quarter of 2008.
The Reserve Bank of New Zealand, scheduled to hold a policy meeting June 13, held its target rate at 2.5 percent in April.
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