The Australian dollar tore higher on Wednesday, spurred on by an impressive domestic growth report and firm Chinese data.
At the local close of trade, the dollar was trading at $US0.9011, up from Tuesday’s close of $US0.8894.
The Australian dollar climbed after data showed Australia's economy grew at its fastest pace in three years last quarter as trade with its Asian neighbours boomed and consumer spending jumped.
Data that showed China's manufacturers produced at a healthy clip in August assured investors there was still solid demand for Australian commodities from Australia's largest export market.
Traders said a range of investors including speculators and mutual funds bought the currency.
"Everything is on fire today and there was broadbased buying," said a trader at a major US bank. He said the Australian dollar could accelerate its rise if it jumps above $US0.9020, where stop-loss buy orders were seen.
Against the yen, the dollar jumped about one yen to 75.93.
On the New Zealand dollar, it climbed as far as $NZ1.2821, a new four-month peak.
Another trader at the US bank said proprietary traders betting on Australia's and New Zealand's divergent rate outlook led the buying.
Indeed, Australia's strong growth report led some rates investors to trim bets for the Reserve Bank of Australia (RBA) to cut rates in coming months to cope with an anaemic US economy.
In fact, some reckoned the RBA may even have to lift rates again from 4.5 per cent given the buoyant domestic economy.
"The RBA must lean into the domestic economy to free resources for this investment or risk a burst of inflation," ANZ said, adding it was sticking to its best for the RBA to lift rates to 5.0 per cent by December.
Interbank futures skidded across tenors, with the March contract taking the biggest hit by shedding 0.10 point.
Bond futures also dropped. Three-year futures slumped 0.09 points to 95.62, and ten-year futures shed 0.02 points to 95.22.
Reuters