Aussie Dollar Surges on RBNZ Disappointment and Strong Australian Growth
The Australian Dollar surged to two-month highs against its New Zealand counterpart on Wednesday, driven by investors' disappointment in the Reserve Bank of New Zealand's (RBNZ) monetary policy decision and stronger-than-expected economic growth in Australia.
The RBNZ lifted the Official Cash Rate by 25 basis points to 2.75%, but its comments on a more gradual tightening path than markets had priced in led to a softer currency reaction.
RBNZ Governor Anna Borman noted that the key question is whether economic recovery expands as expected, hinting at further rate hikes while refusing to commit to a fixed rate path.
Australia's GDP data revealed stronger-than-expected growth in the second quarter, expanding at a 0.4% pace from April to June and beating expectations of a 0.3% rise.