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

 

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Restrictions Lifted: No Further Tau Flies Found

The Ministry for Primary Industries (MPI) confirms that all restrictions on the movement of fruit and vegetables in Manurewa, Auckland, due to the Tau fly, have been lifted as of 2.26pm on Sunday 7 February. More>>

Crowdfinding: Awaroa Beach To Become Public Land If Appeal Succeeds

Conservation Minister Maggie Barry says a privately-owned beach will become part of the Abel Tasman National Park if an online crowdfunding campaign to buy it succeeds... More>>

ALSO:

Meat Workers Union: Waitangi Mondayisation Flaunted By Large Employer Of Maori

At the AFFCO Talley owned meat plant in Rangiuru, the company has resorted to bullying and threats... saying they could be disciplined and their union sued for an unlawful strike if workers exercise their rights to a paid day off tomorrow. More>>

Earlier:

ETS Review: Modelling Documents Released

Three technical documents are being released to help New Zealanders engage with the Emissions Trading Scheme (ETS) review, Climate Change Minister Paula Bennett says. More>>

ALSO:

Northland: Govt Plan Targets Transport, Web, Maori Assets

The government has released a 10-year plan to attract investors and lift economic growth in Northland, a region that perennially underperforms the rest of the country even while being endowed with natural beauty, productive land, minerals, a potential workforce, scope for manufacturing, forestry and aquaculture, and proximity to Auckland. More>>

ALSO:

Statistics: Unemployment Rate Falls To 5.3 Percent

The unemployment rate fell to 5.3 percent in the December 2015 quarter (from 6.0 percent), Statistics New Zealand said today. This is the lowest unemployment rate since March 2009. There were 16,000 fewer people unemployed than in the September ... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news