Aussie Up on Bernanke Testimony as Kiwi Drops on Whole Milk Prices

By TraderVox.com

Tradervox.com (Dublin) – The Australian dollar increased to its highest level in two weeks after Federal Reserve Chairman Ben S. Bernanke indicated that the central bank is prepared to take measures to stimulate the US economy, raising speculation the Fed will add stimulus. The Aussie also continued with its three-day advance against the greenback after the Nation’s leading economic indicator jumped to the highest level last seen in August. However, the New Zealand dollar halted its two day advance after report from Fonterra Cooperative Group Ltd indicated that the prices of whole milk dropped in a second straight auction.

According to Mike Jones, a Currency Strategist in Wellington at Bank of New Zealand, the continued speculation about the third round of quantitative easing has sparked a demand for the Australian and New Zealand dollar even though for the short term. These speculations, which were sparked by Bernanke’s comment as he responded to questions from the Senate Banking Committee, have led to riskier asset demand. Bernanke is expected to continue with his testimony today where more information about stimulus measures might be revealed.

According to a report released by the Westpac Banking Corp and Melbourne Institute today, the Australian leading economic index rose to the highest level in almost a year. The index, which measures future economic growth, showed an advance of 0.8 percent in May to record a reading of 282.5 points. The statement from Bill Evans, who is the Chief Economist at WBC indicated that growth in the second half of the 2012 and that of 2013 will have a improving tempo. He also stated that the monetary authority might keep the current policies for few months following the strong growth registered in the first quarter.

After the publishing of the statement, the Australian dollar rose to $1.0326, which is the strongest it has been since July 5. It had climbed by 0.7 percent yesterday to trade at $1.0316.

On the other South Pacific country, bad news from Fonterra Cooperative Group Ltd led to a decline in the demand for the New Zealand dollar. The kiwi slid against the greenback by 0.2 percent to trade at 79.67 US cents.

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