NZ dollar gains against Aussie on increased odds of RBA rate cut
By Jenny Ruth
June 13 (BusinessDesk) - The New Zealand dollar gained against the Australian dollar after mixed jobs data drove Australian wholesale interest rates to record lows.
The kiwi was trading at 95.08 Australian cents at 5pm in Wellington from 94.83 at 8am and 94.50 at 5pm yesterday. The domestic currency was otherwise unchanged at 65.70 US cents and the trade-weighted index little changed at 72.22 points from 72.21.
The Australian data showed 42,300 jobs were added in May, more than double economists’ expectations of 16,000, and the unemployment rate ticked up to 5.2 percent when the market had expected 5.1.
“You can interpret it a number of ways. Our interpretation was it was mixed and, overall, not a strong report,” says Imre Speizer, market strategist at Westpac.
“Yes, total jobs were stronger, but the unemployment rate went up and most of the jobs were part-time.”
While the data was probably neutral from the Reserve Bank of Australia’s point of view, “the market was looking for negative news and they found it,” Speizer says.
The RBA cut its cash rate by 25 basis points to 1.25 percent on June 5 and the market is now pricing in a 70 percent chance of another cut in July, up from 55 percent ahead of the jobs data, Speizer says.
The New Zealand dollar was trading at 51.76 British pence from 51.77, at 58.15 euro cents from 58.18, at 71.20 yen from 71.28, and at 4.5458 Chinese yuan from 4.5446.
The New Zealand two-year swap rate edged down to 1.3780 percent from 1.4100 yesterday while the 10-year swap rate eased to 1.8580 percent from 1.9025.