The Aussie dollar gained on the US Dollar last week as an increase in commodities buoyed investor demand.
The Aussie gained for a second day after a government report released showed that the inflation rate almost doubled since last quarter.
In New Zealand, the Kiwi also rose against the US Dollar after previously falling when Alan Bollard indicated he will increase interest rates at a much slower pace than was previously predicted.
The Aussie traded near a one week low against the Yen as stocks tumbled after the credit downgrade of Greece saw investors dodging higher-yielding assets; this caused the Aussie to open 1% lower on Wednesday.
Greece’s credit rating has now been downgraded to junk status, which means that investors have between 30% to 50% chance of their money repaid.
Investors seem to be wary that the nation’s problems could spread across Europe and hold back economic growth.
Australia’s consumer prices rose by more than what was originally forecasted and key measures of inflation came out better than what policymakers had hoped.
Some economists believe that the RBA has a 1 in 3 chance of a rate increase in the next month. Benchmark interest rates are 4, 25% in Australia and 2, 5 % in New Zealand, compared to a tiny 0, 1 % in Japan; this seems to be attracting investors to the South Pacific nations’ higher yielding assets.
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