The Australian Dollar, along with the New Zealand Dollar headed for a weekly gain on the possibility of further rate hikes, increasing the interest rate differential against the US. Inflation is at its fastest pace in 16 years, prompting a possible interest rate hike if global stock markets rise. New Zealand's central bank also expressed the possibility of raising interest rates to curb its growing inflation rate. ''The Australian dollar is getting additional support from increased confidence that rates are going up,'' said Ray Attrill, director of foreign-exchange research at Forecast Ltd. in Sydney. ''Every hour of every day that stock markets aren't going down, traders are getting more confident rates will rise Feb. 5.'' The Australian and New Zealand Dollars further strengthened as the US Federal Reserve unexpectedly slashed U.S. interest rates on the 22nd of January by three quarters of a percentage point to 3.5 percent. Australian interest rates are currently at an 11-year high of 6.75 percent and New Zealand's benchmark at a record 8.25 percent.
The Australian Dollar was the third best performer in forex trading amongst the 16 most traded currencies. Buyers have supported the Australian Dollar as it traded at 88.42 US cents compared with 87.23 US cents in the previous day's trade. Buyers also supported the New Zealand Dollar, trading at 77.21 US cents compared with a previous trade of 76.70 US cents.
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