Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ dollar little changed vs. Oz dollar as RBA looms

NZ dollar little changed vs. Australian dollar after weak retail sales, as RBA looms

By Paul McBeth

Dec. 3 (BusinessDesk) - The New Zealand dollar was little changed against its Australian counterpart as sluggish consumer spending across the Tasman stoked speculation the Reserve Bank of Australia may cut interest rates deeper than initially anticipated.

The kiwi traded at 78.68 Australian cents from 78.65 cents on Friday in New York. The currency was little changed at 81.95 US cents at 5pm in Wellington from 82.04 cents at 8am, and 81.98 cents last week.

Australia's retail trade was unchanged last month, according to government figures, falling short of the 0.4 percent growth expected by economists. That's heightened expectations the RBA may have to cut the target cash rate more than anticipated to keep the nation's economy ticking over as the resources boom slowly unwinds. Traders are pricing in 72 basis points of cuts to the 3.25 percent benchmark rate over the coming 12 months, according to the Overnight Index Swap curve.

"Now capex is weaker, markets are looking for stuff to take its place like consumer spending – but on the face of it, it's not going to take the job of the resources boom," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "There's a chance it (the kiwi) could break above 80 Australian cents" this week, he said.

The RBA meeting tomorrow comes ahead of gross domestic product and employment later in the week, and New Zealand's central bank meeting on Thursday.

Reserve Bank of New Zealand governor Graeme Wheeler is expected to keep the official cash rate at 2.5 percent, which would effectively reduce Australia's yield advantage if the RBA cuts as expected tomorrow.

"Wheeler might be a little bit hawkish by talking about the housing market in Auckland and Christchurch and its potential for producing inflation," Speizer said.

Government figures today showed deteriorating terms of trade in the third quarter, with export prices for dairy products sliding 13 percent, even as the volume sold surged 32 percent. Earlier this month, Wheeler told politicians the currency is more closely aligned to the terms of trade over the long term than interest rate adjustments.

A BusinessDesk survey of strategists predicts the kiwi will probably fall against the greenback this week with a slowing Australia taking its toll on the local currency, and as US policymakers dither in trying to cut a deal to avoid the fiscal cliff - US$607 billion in automatic tax hikes and spending cuts scheduled to kick in on Jan. 1.

Three of those polled see it ending the week lower, two higher and two see it range-bound.

The kiwi dollar traded at 67.53 yen at 5pm in Wellington from 67.58 yen last week while the trade-weighted index was little changed at 73.32 from 73.39. The New Zealand dollar fell to 62.84 euro cents from 63.10 cents and declined to 51.09 British pence from 51.21 pence.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Speaking For The Bees: Greens Call For Neonicotinoid Pesticide Ban

The National Government should ban the use of controversial pesticides called neonicotinoids after evidence has revealed that even at low doses they cause harm to bee populations, the Green Party said today. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news