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


NZ dollar falls after Westpac's RBA rate cut call

NZ dollar falls with Aussie after Westpac's RBA rate cut call

By Jenny Ruth

May 24 (BusinessDesk) - The New Zealand dollar fell in unison with its Australian counterpart against the greenback after Westpac forecast the Reserve Bank of Australia will cut interest rates three times this year.

The kiwi was trading at 65.16 US cents at 5pm in Wellington, after falling as low as 65.10 on the Westpac call, from 65.20 at 7:45am. The trade-weighted index eased to 71.96 points from 71.97.

“The June cut remains almost certain; a second in August is our expectation and the November cut should also proceed,” Westpac chief economist in Australia, Bill Evans says.

“Therefore, Westpac is now forecasting three cuts in 2019 in June, August and November to push the cash rate from 1.5 percent to 0.75 percent and to hold at that level through 2020,” Evans said in a note.

That means the Australian dollar should reach 66 US cents by the end of this year from 68.86 currently.

Evans is even talking about the RBA using “quantitative easing,” a form of money printing that involves the central bank buying bonds.

If the Australian cash rate goes as low as 0.75 percent, or possibly, 0.5 percent, the RBA may decide that QE would be more effective than cutting the cash rate further, he says.

Westpac market strategist Imre Speizer says the other thing weighing on the currency is the ongoing trade tensions between the US and China.

“An official in the US accused the Chinese of lying and the Chinese are saying, 'we’re not going anywhere unless you back off,'” Speizer says.

US Secretary of State Mike Pompeo accused Chinese telecommunications firm Huawei of lying about its ties with China’s government.

“For them to say that they don’t work with the Chinese Government is false,” Pompeo said in an interview with CNBC. “The Huawei CEO on that, at least, isn’t telling the American people the truth. The company is deeply tied, not only to China, but to the Chinese Communist Party,” Pompeo said.

News that the US purchasing managers index, a measure of manufacturing, fell to 50.6 points in May, its lowest level since September 2009, didn’t help market sentiment, Speizer says.

That fall was attributed to trade war worries and the resulting increased uncertainty for businesses. It has also revived talk of the Federal Reserve cutting interest rates later this year.

If the RBA and the Fed cut rates, that increases the likelihood New Zealand’s Reserve Bank will also cut rates further – it last cut the official cash rate to 1.5 percent, a record low, on May 8.

The New Zealand dollar was trading at 94.61 Australian cents from 94.55, at 51.46 British pence from 51.52, at 58.28 euro cents from 58.29, at 71.42 yen from 71.40 and at 4.5042 Chinese yuan from 4.5038.

The New Zealand two-year swap rate fell to 1.4769 percent from 1.5041 yesterday while the 10-year swap rate eased to 1.9625 percent from 1.9950.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Banking: Westpac NZ Lowers Merchant Fees For Small Businesses

Westpac NZ is rolling out a new merchant fee pricing structure that will lead to cost savings for more than 10,000 small and medium Kiwi businesses, and could make contactless transactions more widely available for customers. On 1 September, most ... More>>

REINZ: Million Dollar Plus Property Sales Increase 11.7% Nationally

The number of properties sold around the country for one million dollars or more during the first half (H1) of 2020 increased by 11.7% compared to H1 2019, with 5,426 million-dollar plus properties sold (up from 4,858 in H1 2019) according to the Real ... More>>

Waste: Government To Regulate Plastic Packaging, Tyres, E-Waste

The Government is stepping up action to deal with environmentally harmful products – including plastic packaging, tyres and e-waste – before they become waste. As part of the wider plan to reduce the amount of rubbish ending up in landfills, ... More>>


Bankers Association: Banking Becomes First Living Wage Accredited Industry

Banking has become New Zealand’s first fully living wage accredited industry, leading to nearly 1800 employees and contractors moving onto the living wage and gaining greater economic independence for them and their families. As of today, all ... More>>


Economy: Funding For 85% Of NZ Not-For-Profit Entities Impacted By COVID-19

Results of a recent Institute of Directors poll show that 85% of board members on not-for-profit organisations say COVID-19 has moderately or significantly affected their funding. The ‘pulse check’ conducted in the first two weeks of July looked ... More>>

Volcano Detection: Eruption Alert System Would Have Given 16 Hours’ Warning At Whakaari

An alert system that could have given 16 hours’ warning of last year’s eruption at Whakaari/White Island is ready for deployment, University of Auckland scientists say, with warning systems for Ruapehu and Tongariro the next priority. ... More>>

Property: Queenstown Rents Experience Biggest Drop In Seven Years

Rental prices in the Queenstown-Lakes district saw the biggest annual percentage drop in seven years after falling 28 per cent on June last year, according to the latest Trade Me Rental Price Index. Trade Me Property spokesperson Aaron Clancy said ... More>>

Seismology: The Quiet Earth

As many daily activities came to a halt during lockdown, the Earth itself became quiet, probably quieter than it has been since humans developed the technology to listen in. Seismologists have analysed datasets from more than 300 international ... More>>

RNZ: James Shaw Says Kiwibank, Not Ministers Should Decide On Investors

Climate Change Minister James Shaw says Kiwibank's decision to stop doing business with companies dealing in fossil fuels is the right one. More>>


FMA: Kiwis Confident Financial Markets Will Recover From COVID-19, Plan To Increase Investments

Despite the majority (60%) of investors experiencing losses as a result of COVID-19, the outlook on investing remains positive, according to a Financial Markets Authority (FMA) survey. Most Kiwis (71%) were optimistic that the pandemic will pass eventually ... More>>

FIRST Union: Warehouse Using Covid For Cover As Extensive Restructure Makes Everyone Worse Off

(FIRST Union comments on The Warehouse consultation and proposed restructure) 'Unfortunately the Warehouse have done the disappointing thing and used Covid-19 to justify a bunch of operational business decisions that will leave hundreds of workers without jobs ... More>>


Stats NZ: Mixed Performance By Regions Leaves National Emissions Picture Unchanged

Approximately two-thirds of New Zealand’s regions recorded decreases in their total greenhouse gas emissions, while one-third of regions saw increases between 2007 and 2018, Stats NZ said today. “While some regions reduced their emissions, ... More>>

RNZ: Economic Activity And Business Confidence Bouncing Back

Two surveys from ANZ show business confidence and economic activity have rebounded, but uncertainty about the future remains extreme. More>>