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 yen is set to snap this month’s advance against its Group of 10 peers, trading patterns suggest, amid speculation the Bank of Japan will have to expand monetary easing to ensure it meets an inflation target.
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.