The Australian dollar rose against its 16 most-traded peers after policy makers said in minutes of this month’s meeting that the inflation outlook is being affected by recent currency declines.
The Aussie and New Zealand dollars climbed for a second day as investors pared bets on gains in the U.S. currency before Federal Reserve Chairman Ben S. Bernanke testifies to Congress this week. Gains in the kiwi dollar were limited as the statistics bureau said consumer price increases in the second quarter slowed more than economists had estimated.
“There were some marginal shifts in the RBA’s language acknowledging the potential impact of the the currency’s decline on its inflation outlook,” said Robert Rennie, the chief currency strategist at Westpac Banking Corp. (WBC) in Sydney. “There’s an argument to suggest we’ve gotten far too bearish on the Aussie. If you’re sitting short Aussie off the lows you’re probably feeling a bit nervous and that’s really why we’re seeing a bounce.” A short position is a bet a currency will decline in value.