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 and didn't try to "jawbone" the nation's currency lower.
The kiwi touched a low of 93.07 Australian cents this morning, and was trading at 93.10 cents at 8am in Wellington from 93.59 cents at 5pm yesterday. 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 yesterday.
The Australian dollar was the best performing major currency tracked by Reuters overnight after governor Stevens, speaking at an investor conference in Hong Kong last night, pointed to early signs the nation is in a transition from mining-led growth to domestic consumption. Stevens didn't repeat previous comments that the Aussie was overvalued.
"AUD continues to strengthen with optimism over rebalancing growth and a lack of 'jawboning' by RBA governor Stevens driving strength," ANZ Bank New Zealand strategist Carrick Lucas and senior FX strategist Sam Tuck said in a note. "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."
The kiwi dollar will probably trade between 93 Australian cents and 93.70 cents today, ANZ said.
