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

 

NZ dollar jumps vs. A$ on increased prospect of RBA rate cut

NZ dollar jumps to three-month high vs. Aussie as chance of RBA rate cut increases

By Tina Morrison

July 4 (BusinessDesk) - The New Zealand dollar surged to a three-month high against its Australian counterpart, hovering just under 94 Australian cents, as expectations rise that the Australian central bank may reduce interest rates.

The kiwi touched 93.95 Australian cents overnight, its highest since March 27, and was trading at 93.56 cents at 8am in Wellington, from 93.45 cents at 5pm yesterday. The local currency slipped to 87.51 US cents from 87.67 cents yesterday after a report showed the US added 288,000 jobs last month, beating expectations for an additional 215,000 jobs and boosting optimism about a revival in the world's largest economy.

The Australian dollar declined after weaker than expected retail sales data and following dovish comments by Reserve Bank of Australia governor Glenn Stevens who said yesterday the Aussie was overvalued "and not by just a few cents" and that investors were underestimating the probability of a "significant fall" in the currency at some point. Stevens said the RBA "still has ammunition on interest rates", prompting traders to increase their expectations for a 25 basis point cut in interest rates to 60 percent from around 30 percent previously, according to Bank of New Zealand.

"He was stronger in talking down the currency and he also hinted that they wouldn't rule out interest rate cuts," said Imre Speizer, Westpac Banking Corp senior market strategist. "Those two things are clearly going to push down the Aussie so therefore kiwi/Aussie has to rise. It looks like it could go further still."

Speizer said the kiwi/Aussie cross rate may reach 94 cents but might struggle beyond that level.

Today, the Reserve Bank of Australia's head of financial stability, Luci Ellis, is scheduled to speak to the 2014 Economic and Social Outlook Conference in Melbourne.

US Markets are closed for Independence Day.

The New Zealand dollar advanced to 64.31 euro cents from 64.21 cents yesterday after European Central Bank president Mario Draghi affirmed the bank's low interest rate policy.

The kiwi edged lower to 51.02 British pence from 51.08 pence yesterday and advanced to 89.41 yen from 89.28 yen. The trade-weighted index was little changed at 81.49 from 81.47 yesterday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fletcher Whittled: Fletcher Dumps Adamson In Face Of Dissatisfaction

Fletcher Building has taken the unusual step of dumping its chief executive, Mark Adamson, as the company slashed its full-year earnings guidance and flagged an impairment against Australian assets. More>>

ALSO:

No More Dog Docking: New Animal Welfare Regulations Progressed

“These 46 regulations include stock transport, farm husbandry, companion and working animals, pigs, layer hens and the way animals are accounted for in research, testing and teaching.” More>>

ALSO:

Employment: Most Kiwifruit Contractors Breaking Law

A Labour Inspectorate operation targeting the kiwifruit industry in Bay of Plenty has found the majority of labour hire contractors are breaching their obligations as employers. More>>

ALSO:

'Work Experience': Welfare Group Opposes The Warehouse Workfare

“This programme is about exploiting unemployed youth, not teaching them skills. The government are subsidising the Warehouse in the name of reducing benefit dependency,” says Vanessa Cole, spokesperson for Auckland Action Against Poverty. More>>

ALSO:

Internet Taxes: Labour To Target $600M In Unpaid Taxes From Multinationals

The Labour Party would target multinationals operating in New Zealand to ensure they don't avoid paying tax if it wins power and is targeting $600 million over three years through a "diverted profits tax," says leader Andrew Little. More>>

ALSO: