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

 


NZ dollar may gain vs. Australian dollar on RBA move

NZ dollar may gain vs. Australian dollar on expectations of RBA rate cut

By Paul McBeth

Dec. 4 (BusinessDesk) - The New Zealand dollar may gain against its Australian counterpart if the Reserve Bank of Australia cuts interest rates as expected, as the resources boom slows across the Tasman and forces the regulator to reduce its yield advantage.

The kiwi dollar increased to 78.78 Australian cents at 8am in Wellington from 78.68 cents yesterday, and advanced to 82.10 US cents from 81.95 cents.

Traders have almost fully priced in a 25 basis point rate cut when the Reserve Bank of Australia reviews monetary policy today, giving it a 93 percent chance, according to the Overnight Index Swap curve.

The RBA has to contend with a slowing mining sector, which propped up the world's 12th biggest economy during the global financial crisis and its after-effects. If the RBA cuts the target cash rate to 3 percent as expected, that will reduce its yield advantage over New Zealand to half a percentage point.

"The RBA's not necessarily going to tell the market it's using the cash rate as a tool to control the currency, but it's part of their strategy," said Dan Bell, currency strategist at HiFX in Auckland. "I'm surprised the kiwi hasn't got higher (against the Australian dollar) already."

Today's RBA meeting comes two days before New Zealand's central bank governor Graeme Wheeler reviews monetary policy, when he is expected to keep the official cash rate at 2.5 percent. Traders are pricing in an 18 percent chance for a rate cut.

The euro rose to a six-week high after Greece offered to buy back 10 billion euros in bonds, as the Mediterranean nation pursues its austerity goals after securing sweeter terms for its regional rescue package. The kiwi was little changed at 62.86 euro cents from 62.84 cents yesterday.

Investors are still sweating over US legislators' ability to put aside partisan leanings and reach a compromise to scale the fiscal cliff of US$607 billion of automatic tax hikes and spending cuts that kick in on Jan. 1.

The currency traded at 67.48 yen from 67.53 yen yesterday, and declined to 50.99 British pence from 51.09 pence. The trade-weighted index was almost unchanged at 73.33 from 73.32 yesterday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Surreal Estate: Home Values Rise At Fastest Rate In Seven Years

The latest monthly QV House Price Index shows that nationwide residential property values for July have increased 10.1% over the past year which is the fastest annual rate since 2007... The Auckland market has increased 18.8% year on year. More>>

ALSO:

New Employment Laws: Talley’s AFFCO Workers To Strike

The decision comes after the Talley’s owned company walked away from mediation last week and applied to end bargaining under the government’s new employment laws - the first such application since the law came into effect. More>>

Private Action: Employer Pleads Guilty Over Forestry Death

The CTU has always known that the death of forestry worker Charles Finlay was due to the poor health and safety practices of his employer... "The CTU, with the support of Charles’s family, needed to take this ground breaking private prosecution." More>>

ICT Innovation: Six NZ Finalists In World Summit Awards

The awards are a global showcase of 40 projects, across eight categories, with a special emphasis on those which show the benefits of information and communication technology for the development of communities. New Zealand has finalists in six of the eight categories. More>>

ALSO:

Final Frontier: Rocket Lab And NASA Sign Commercial Space Launch Agreement

Rocket Lab has signed a Commercial Space Launch Act Agreement with the National Aeronautics and Space Administration (NASA). The agreement enables Rocket Lab to use NASA resources - including personnel, facilities and equipment - for launch and reentry efforts. More>>

ALSO:

Scoop Business: Wheeler Downplays Scope For ‘Large’ Rates Fall

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news