By Candice Zachariahs March 3 (Bloomberg) -- The Australian dollar traded near its strongest in a decade against New Zealand’s currency as Australian economic growth accelerated to the fastest in almost two years. The so-called Aussie touched its highest level in a week versus the U.S. dollar after the report backed the central bank’s decision yesterday to increase interest rates for the fourth time since October. New Zealand’s currency gained versus the greenback after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said milk-powder prices rose for the first time in three months. “The Australian economy is in a much better place than the New Zealand economy,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “Momentum favors the Aussie-kiwi at present so we could see a little more strength with quite strong speculative interest.” Australia’s currency traded at NZ$1.2971 as of 4:36 p.m. in Sydney from NZ$1.2980 in New York yesterday when it climbed to NZ$1.30, the strongest since 2000. The Aussie rose 0.2 percent to 90.52 U.S. cents after touching 90.65 cents, the highest since Feb. 23. The currency was little changed at 80.35 yen. New Zealand’s dollar gained 0.3 percent to 69.78 U.S. cents, and traded at 61.95 yen from 61.85 yen. Investors should consider selling the Aussie if it rises above NZ$1.30, anticipating a “correction,” Jones said. The currency may advance to 90.70 U.S. cents while New Zealand’s dollar will face so-called resistance at 70.70 cents, he said. Gross domestic product climbed 0.9 percent last quarter from the previous three months, when it gained a revised 0.3 percent, the Bureau of Statistics said in Sydney today. ‘Closer to Average’ Australia’s dollar has climbed against 13 of its 16 major counterparts over the past month as concern eased over Greece’s ability to finance its debt. The currency also advanced after the Reserve Bank of Australia yesterday increased its benchmark interest rate to 4 percent and said it was appropriate for its target to be “closer to average.” The Australian dollar is trading at 0.6634 euro, near its strongest since 1997 and at 60.122 pence, near its highest level since 1985 against the pound. The currency touched the highs of 0.6682 euro and 60.615 pence yesterday. “Risk takers are becoming more discerning,” said Robert Ryan, a currency strategist at BNP Paribas SA in Singapore. “When we say risk-on, it’s no longer everything against the U.S. dollar. The Aussie is likely to fall somewhat against the dollar as the U.S. moves into recovery mode in terms of reducing liquidity and eventually tightening, but euro and sterling have further to fall.” The Aussie may climb toward NZ$1.35 if it rises above so- called resistance at NZ$1.30, he said. Milk Prices New Zealand’s dollar was bolstered after Fonterra said whole milk powder for May delivery rose 2.8 percent to $3,291 a metric ton, according to data on the company’s GlobalDairyTrade Web site. Prices fell in the January and February auctions, having reached a 16-month high in December. They remain 56 percent higher than a year earlier. Australian government bonds fell. The yield on the benchmark 10-year notes gained four basis points to 5.49 percent, according to data compiled by Bloomberg. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 4.11 percent. --With assistance from Jacob Greber in Sydney and Tracy Withers in Wellington. Editors: Nicholas Reynolds, Garfield Reynolds %NZD %AUD %USD %EUR %JPY To contact the reporter on this story: Candice Zachariahs in Sydney at +612-9777-8633 czachariahs2@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net. Related Articles

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