The Australian dollar extended a gain from last week as investors maintained bets on a greater than 50 percent chance the nation’s central bank will raise interest rates within a year as the economy strengthens.
Australia’s dollar fell, paring its first five-day gain in three weeks, while the New Zealand kiwi slid after the central bank governor said the currency’s level is a headwind for growth and unsustainable in the long run.
Australia’s dollar rose, paring its biggest annual slide since 2008, as investors eased bets on further declines in the currency, which has trailed only the yen as the worst performer among major peers this year.
Australia’s dollar was 0.2 percent from a five-year low versus New Zealand’s currency before the larger nation’s Reserve Bank meets amid repeated calls from its policy makers for a lower exchange rate.
The dollar fell versus the euro and the yen after Federal Reserve Chairman Ben S. Bernanke said the central bank’s main interest rate will probably remain near zero for a “considerable time” after asset purchases end.
The dollar rose against most major peers as Federal Reserve officials said they might reduce their $85 billion in monthly bond purchases “in coming months” as the economy improves, minutes of their last meeting show.
The Australian dollar fell for a fourth straight week versus its U.S. counterpart as European leaders’ struggle to agree on measures to resolve the region’s debt crisis curbed demand for higher-yielding assets.