Australia’s dollar was set for its first five-day gain in three weeks and bond yields rose from the lowest in three months after Asian stocks extended a global rally on easing emerging market concerns.
The Aussie held the biggest increase since August 2011 versus its New Zealand counterpart ahead of a Reserve Bank of Australia meeting next week when 95 percent of swaps trader expect policy makers to keep rates on hold at 2.5 percent. The kiwi currency was poised for its biggest weekly loss in more than a month after Reserve Bank of New Zealand Governor Graeme Wheeler said the currency’s level is a headwind for growth and unsustainable in the long run.
“Interest rates in Australia have bottomed; we don’t expect another cut by the RBA, and the next move will be a hike before the end of the year,” said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company. “The Aussie had a big whack already against most major currencies. We expect the low in the Aussie to be not too far from where we are at the moment.”
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