NZ dollar climbs a little on poor Australian housing data
By Jenny Ruth
May 3 (BusinessDesk) - The New Zealand dollar firmed slightly after further bad news about Australia’s housing market but ended down on the week as investors bet on the chance of a rate cut.
The kiwi was trading at 66.22 US cents at 5pm in Wellington from 66.15 at 9am. It was at 94.64 Australian cents from 94.46 and the trade-weighted index was at 72.32 points from 72.27.
The currency has dropped from 69.59 US cents in New York last Friday.
Figures earlier today showed Australia’s dwelling approvals fell 15.5 percent in March from February, largely because of a 30 percent drop in apartments approvals. Approvals were down 27.3 percent from March last year.
The figures come after data earlier in the week showed house prices in Sydney and Melbourne continue to fall and were down 10.9 percent and 10 percent respectively in the year ended March.
“It’s a case of more bad news in Australia on the housing market, which is the Reserve Bank of Australia’s big domestic worry at the moment,” says Peter Cavanaugh, the senior client advisor at Bancorp Treasury Services.
The housing market in New Zealand is much less of a problem for our central bank.
The US dollar has also risen following Federal Reserve chair Jerome Powell’s comments that current low inflationary pressures will be “transitory” and that there’s no need for a rate cut in the US.
Cavanaugh says the market is still pricing in about a 50/50 chance of a rate cut in New Zealand next Wednesday when the Reserve Bank of New Zealand releases its latest monetary policy statement.
That’s more than the 33 percent chance of a rate cut in Australia next Tuesday when the RBA announces its latest verdict.
The New Zealand dollar was trading at 50.78 British pence from 50.74, at 59.28 euro cents from 59.21, at 73.82 Japanese yen from 73.78 and at 4.4591 Chinese yuan from 4.4557.
The New Zealand two-year swap rate fell to 1.6197 percent from 1.6239 yesterday while the 10-year swap rate edged up to 2.1875 percent from 2.1825.