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

 

Half Full: Dairy Payouts Steady, Cash Will Be Tight

Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season following Fonterra's half-year results announcement today. More>>

ALSO:

First Union: Cotton On Plans To Use “Tea Break” Law

“The Prime Minister reassured New Zealanders that ‘post the passing of this law, will you all of a sudden find thousands of workers who are denied having a tea break? The answer is absolutely not’... Cotton On is proposing to remove tea and meal breaks for workers in its safety sensitive distribution centre. How long before other major chains try and follow suit?” More>>

ALSO:

Scoop Business: NZ-Korea FTA Signed Amid Spying, Lost Sovereignty Claims

A long-awaited free trade agreement between New Zealand and South Korea has been signed in Seoul by Prime Minister John Key and the Korean president, Park Geun-hye. More>>

ALSO:

PM Visit: NZ And Viet Nam Agree Ambitious Trade Target

New Zealand and Viet Nam have agreed an ambitious target of doubling two-way goods and service trade to around $2.2 billion by 2020, Prime Minister John Key has announced. More>>

ALSO:

Scoop Business: NZ Economy Grows 0.8% In Fourth Quarter

The New Zealand economy expanded in the fourth quarter as tourists drove growth in retailing and accommodation, and property sales increased demand for real estate services. More>>

ALSO:

Scoop Business: RBNZ’s Wheeler Keeps OCR On Hold, No Rate Hikes Ahead

The Reserve Bank has removed the prospect of future interest rate hikes from its forecast horizon as a strong kiwi dollar and cheap oil hold down inflation, and the central bank ponders whether to lower its assessment of where “neutral” interest rates should be. The kiwi dollar gained. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news