The Australian dollar halted a four-day gain, its longest winning stretch in seven weeks, before a report tomorrow that is forecast to show the nation’s unemployment rate rose to match the highest level since 2009.
New Zealand’s dollar held two days of declines versus the Aussie before the country’s Reserve Bank meets tomorrow with traders predicting 100 basis points of interest rate increases over a year, making the kiwi vulnerable to disappointment. Both South Pacific nations’ currencies may weaken as prospects of a bipartisan deal to ease budget cuts in the U.S. raised odds the Federal Reserve will trim stimulus at a meeting next week.
“The big risks for the Aussie and kiwi are tomorrow’s labor force data and the RBNZ meeting,” said Peter Dragicevich, a currency strategist in Sydney at Commonwealth Bank of Australia, the nation’s biggest lender. “If the U.S. budget deal is passed this week, there is a growing chance that the Fed could begin to taper asset purchases at next week’s meeting and that could see the U.S. dollar pick up into year-end.”
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