The New Zealand dollar dropped to a three-week low against its trans-Tasman counterpart after Reserve Bank of Australia governor Glenn Stevens delivered an upbeat speech about prospects for the Australian economy.
The kiwi touched a low of 93.07 Australian cents on Thursday morning, and was trading at 93.10 cents at 8am in Wellington from 93.59 cents at 5pm on Wednesday.
Australia’s currency rose to a four-month high of 92.44 US cents overnight and the New Zealand dollar was pulled along with it, touching a week-high of 86.20 US cents overnight to trade at 85.95 cents at 8am, from 85.87 cents at 5pm on Wednesday.
The Australian dollar was the best performing major currency tracked by Reuters overnight after Mr Stevens, speaking at an investor conference in Hong Kong, pointed to early signs the nation is in a transition from mining-led growth to domestic consumption.
He didn’t repeat previous comments that the Aussie was overvalued.
“Markets took the lack of ‘jawboning’ on the AUD as a green light to continue AUD appreciation. Also taken as a positive were the ‘promising signs’ on growth rebalancing away from mining investment.”
AUD continues to strengthen with optimism over rebalancing growth and a lack of ‘jawboning’ by RBA governor Stevens driving strength,” ANZ Bank New Zealand said in a note.
New Zealand Reserve Bank deputy governor Grant Spencer will speak to the investment conference on macro-prudential policy and the release New Zealand’s trade balance for February is unlikely to change the theme of New Zealand dollar strength, ANZ said.
The kiwi reached a new four-month high of 62.49 euro cents overnight and was at 62.34 cents at 8am from 62.16 cents after European Central Bank officials signalled a softening of monetary policy earlier this week.
The local currency slipped to 51.85 British pence from 51.94 pence and weakened to 87.72 yen from 87.83 yen. The trade-weighted index was little changed at 80.18 from 80.16.