By Rebecca Howard
July 25 (BusinessDesk) - The New Zealand dollar rose further against the Australian dollar as expectations for further rate cuts across the Tasman grow.
The kiwi was trading at 96.12 Australian cents at 8am in Wellington from 95.86 Australian cents at 5pm. It was at 67.07 US cents versus 66.95 cents, and the trade-weighted index was at 73.50 points from 73.39.
The Australian dollar got knocked back late yesterday when Westpac Banking Corp's chief economist said he now expects Australia's central bank to cut rates twice more. The Australian dollar "struggled to recover much ground as expectations of policy easing grew," said ANZ Bank FX/rates strategist Sandeep Parekh.
Marshall Gittler, chief strategist for ACLS Global, said that three consecutive days of lower iron ore prices may also be weighing on the currency.
The focus is now on a speech by Reserve Bank of Australia governor Philip Lowe on "inflation targeting and economic welfare." Investors will be watching to see if Lowe hints at further easing. Westpac is now expecting a 25 basis point rate cut in October and one early next year, taking the Australian cash rate down to 0.5 percent.
The speech will likely "generate a bit of interest," said Kiwibank trader Mike Shirley who noted "the downward spiral for the New Zealand dollar looks to have run out of steam."
Weak US manufacturing data and mixed home sales data overnight gave the kiwi a slight lift against the US dollar but the kiwi is largely treading water against the greenback as markets "fixate on the upcoming Federal Open Market Committee meeting" early next week, said Parekh. A 25 basis point rate cut is fully priced.
The kiwi was at 53.72 British pence from 53.82, at 60.22 euro cents from 60.05, at 72.57 yen from 72.38 and at 4.6089 Chinese yuan from 4.6062.