NZ dollar higher after Lowe comments viewed as less dovish
By Rebecca Howard
June 24 (BusinessDesk) - The New Zealand dollar gained against the greenback, tracking its Australian counterpart after comments from Reserve Bank of Australian governor Philip Lowe called into question further easing across the Tasman.
The kiwi was trading at 65.98 US cents at 5pm in Wellington from 65.89 cents at 8am. The trade-weighted index was at 72.08 from 72.03.
Lowe told the Australian National University Crawford Leadership Forum in Canberra today that the effectiveness of global monetary policy was weakening, putting the onus on governments to act on fiscal and structural reforms to make up for the weakness in monetary policy, according to the Australian Financial Review.
Tim Kelleher, the head of institutional foreign exchange sales at Commonwealth Bank of Australia, said the kiwi opened stronger and then followed the Australian dollar higher after Lowe's comments "kept the Australian dollar bid all day."
Lowe's comments were considered to be less dovish after last week when he said another rate cut “is not unrealistic to expect." The RBA cut the target cash rate by 25 basis points to 1.25 percent in early June.
The kiwi was trading at 94.85 Australian cents at 5pm in Wellington from 95.01 Australian cents at 8am.
The market will now focus on the Reserve Bank of New Zealand's cash rate decision, due Wednesday afternoon.
The Reserve Bank of New Zealand is expected to keep rates on hold at a record low 1.50 percent but will signal further cuts are possible.
All 20 economists surveyed by Bloomberg expect the official cash rate to stay on hold but 11 expect a 25 basis point rate cut at the Aug. 7 monetary policy review.
The New Zealand dollar was trading at 51.74 British pence from 51.73 British pence, at 58 euro cents from 57.92, at 70.90 yen from 70.53, and at 4.5382 Chinese yuan from 4.5257.
The New Zealand two-year swap rate firmed to 1.2885 percent from 1.2813 percent Friday, while the 10-year swap rate eased to 1.74 percent from 1.7075 percent.