Asian Intervention Rattles US Dollar, Fueling Aussie and Kiwi Gains

The Australian and New Zealand dollars surged on Friday as broad-based US dollar weakness fueled by suspected intervention from Asian foreign exchange authorities, softer-than-expected US economic data, and a surge in risk appetite after strong earnings from Microsoft and Amazon.

The intervention, which likely involved Japan's authorities working alongside South Korea and with tacit support from the United States, provided an ideal backdrop for maximising the impact of dollar weakness, already under pressure following the Fed's decision to hold rates steady on Wednesday.

US economic data disappointed, with inflation rising 0.1% in June below expectations, while personal income rose just 0.2%, and spending increased 0.3%, contributing to a household savings rate fall to 2.7%, its lowest level in four years.

The Bank of Japan's policy decision later today will be watched closely for any signs of pre-emptive action, with some analysts suggesting the bank may choose to raise rates today rather than later in the year, increasing risks for the US dollar.