Improving Aussie outlook pushes NZ dollar to week low against $A
By Tina Morrison
May 9 (BusinessDesk) – The New Zealand dollar dropped to its lowest in more than a week against the Australian currency on improving economic prospects across the Tasman.
The kiwi touched 91.91 Australian cents early this morning, its lowest level since April 28, and was trading at 92.21 cents at 8am in Wellington, from 92.40 cents at 5pm yesterday. The local currency edged lower to 86.52 US cents from 86.58 cents yesterday.
The Australian dollar strengthened after a report showed the Australian jobs market continued to improve with more jobs added than expected in April, bolstering sentiment about Australia's economy.
The Aussie got a further lift from better than expected Chinese trade figures, boosting optimism about the nation’s largest export market. The data pushed the Aussie to a three-week high of 93.94 US cents overnight.
“The Aussie was the star of the show in currency markets…as the unit pushed its way towards the 94 (US cents) figure,” Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York, said in a note. “The double whammy of upside surprises provided a serious boost for the Aussie.”
The Reserve Bank of Australia this week kept its cash rate unchanged at 2.5 percent, as expected, and maintained its view that the best policy setting is to maintain stability in interest rates.
The Aussie’s “recent rise will no doubt be viewed with concern by the RBA, but given the markedly improved fundamental background, the monetary authorities in Sydney will have a difficult time keeping policy accommodative if labour demand continues to strengthen,” Schlossberg said.
The Aussie remains capped at 94 US cents, but a break above this level could see it heading towards 95 cents, Schlossberg said.
At 1:30pm New Zealand time today, the Reserve Bank of Australia publishes its Statement on Monetary Policy following its May 6 meeting. Traders will be watching for any changes to the bank’s view on employment following yesterday’s better data.
RBA assistant governor Guy Debelle also speaks today as part of a panel.
The New Zealand dollar was little changed following an 8:30am speech by New Zealand Reserve Bank deputy governor Grant Spencer on the housing market, where he signalled limits on high debt mortgage lending, introduced in October 2013, won’t be lifted before late in the year, at the earliest.
Later this morning, Statistics NZ will release data on electronic card spending for April and the latest Crown financial statements will also be published.
The New Zealand dollar advanced to 62.44 euro cents from 62.22 cents yesterday after European Central Bank President Mario Draghi signalled a potential interest rate cut next month. The ECB kept its key interest rate steady at a record low 0.25 percent as expected but suggested it might lower it in June if needed.
The kiwi was unchanged at 51.06 British pence after the Bank of England kept its benchmark rate unchanged yesterday. The local currency slipped to 87.87 yen from 88.15 yen yesterday while the trade-weighted index dipped to 80.09 from 80.14.