The Aussie dollar fell versus the U.S. currency and declined to within 0.2 percent of a five-year low against New Zealand’s as traders speculated Australia’s economy will require further stimulus.
The kiwi dollar added to this month’s gains versus the Aussie after the smaller nation’s government forecast construction will surge over the next few years and before New Zealand’s central bank holds a policy meeting on Dec. 12. Australia’s currency weakened as a Federal Reserve official said the U.S. should taper monetary stimulus at the “earliest opportunity.”
“Fundamentally, the market is still pricing in hikes in New Zealand and cuts in Australia, so clearly the trend is going to be lower on Aussie-kiwi,” said Tim Kelleher, head of institutional foreign-exchange sales at ASB Bank Ltd. in Auckland. Both countries central banks “know that U.S. stimulus tapering is coming sooner rather than later so they would be expecting U.S. dollar strength in the new year.”
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