NZ dollar falls vs. Aussie dollar as RBNZ seen cutting rates

NZ dollar falls vs. Australian dollar as RBNZ seen cutting rates while RBA stands pat

By Jonathan Underhill

Oct. 12 (BusinessDesk) - The New Zealand dollar extended its decline against the Australian dollar on speculation the Reserve Bank of New Zealand will cut interest rates again this year while Australia's central bank keeps its cash rate unchanged, narrowing the kiwi dollar's premium.

The kiwi fell to 91.13 Australian cents at 8am in Wellington, from 91.25 cents in New York on Friday and down from 91.69 cents in Asia at the end of last week. It traded at 66.80 US cents from 66.90 cents in New York.

Traders are awaiting New Zealand inflation figures this week, which are expected to confirm increases in consumer prices are well below the level the central bank targets on average, over time. That would give the Reserve Bank room to cut the official cash rate a quarter point to 2.5 percent at its Oct. 29 review, which the overnight interest swap curve puts at 78 percent odds, or at the full monetary policy statement on Dec. 10. By contrast, the odds of a Reserve Bank of Australia cut at its next meeting are just 22 percent and that's also the extent of hikes seen to its cash rate in the next 12 months.

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