NZ dollar gains vs Aussie as RBA keeps rates low, GDP looms

By Jonathan Underhill

June 6 (BusinessDesk) - The New Zealand dollar gained against the Aussie after Australia's central bank kept interest rates on hold as expected and said a return to targeted inflation is likely to be gradual.

The kiwi dollar rose to 92.26 Australian cents as at 8am in Wellington from 91.95 cents late yesterday. The kiwi traded at 70.25 US cents from 70.22 cents yesterday and the trade-weighted index was little changed at 73.56 from 73.53.

RBA governor Philip Lowe yesterday announced an unchanged 1.5 percent cash rate, as expected by economists, and said economic growth was expected to pick up "to average a bit above 3 percent in 2018 and 2019" although he also said further progress in reducing unemployment and having inflation return to target "is expected, although this progress is likely to be gradual." The market will get an update on the pace of growth across the Tasman today with the release of first-quarter gross domestic product figures, which are expected to show the economy grew 0.9 percent in the quarter for an annual expansion of 2.7 percent.

"The AUD is down against all its major rivals with the move lower coming on the back of yesterday afternoon’s RBA monetary policy statement," traders at HiFX said in a note. "Direction for the NZDAUD will be driven by this morning’s Q1 GDP data release."

The New Zealand dollar didn't move much after the results of the latest Global Dairy Trade auction, which showed the GDT price index fell 1.3 percent while whole milk powder retreated 1.1 percent to US$3,205 a tonne.

The kiwi was little changed against the greenback after more favourable US indicators, including a bigger-than-expected rise in the ISM non-manufacturing index, showing strength in the services sector.

The kiwi fell to 52.46 British pence from 52.75 pence late yesterday after a stronger-than-expected UK services sector PMI and traded at 59.97 euro cents from 60.08 cents. The kiwi slipped to 77.09 yen from 77.19 yen and traded at 4.4996 yuan from 4.5008 yuan.

(BusinessDesk)

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