The Australian dollar fell, erasing earlier gains after growth in Chinese manufacturing trailed economists’ estimates, damping trade prospects.
The so-called kiwi touched the highest since August 2011 against its Australian counterpart after Reserve Bank of New Zealand Governor Graeme Wheeler said the smaller nation needs to reduce the budget deficit or face higher interest rates. The central bank kept the benchmark borrowing cost at 2.5 percent yesterday.
“Chinese manufacturing data was not a disastrous result but definitely weaker than what the market was looking for,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “It would certainly take the shine off of Aussie dollar. We should see the Aussie test back through $1.04 at some stage today.”
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