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

 

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

f work for Pumpkin Patch staff

Retail: Pumpkin Patch Brand, IP Sold To Catch Group

The receivers of failed children's clothing retailer Pumpkin Patch have confirmed that the company's brand and intellectual property have been sold to Australian online retailer Catch Group. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news