Aussie and Kiwi Dollars Rise on Fed Credibility Concerns

The Australian and New Zealand dollars gained ground on Thursday as investors reevaluated the likelihood of US interest rate hikes. The Federal Reserve's decision to leave rates steady, despite concerns about inflation, left markets unconvinced.

According to Kerry Craig, global market strategist at J.P. Morgan Asset Management, 'The Fed is likely to face ongoing questions around its credibility.' As a result, the US dollar index slipped, nudging the Aussie up 0.1% to $0.6960 and the kiwi dollar firmed 0.2% to $0.5806.

A benign inflation report in Australia led investors to scale back bets on a rate hike at home, with markets now implying no chance of a rise at the Reserve Bank's August meeting and only a 50-50 chance by December.