NZD falls against Aussie on RBA reaction

By Jonathan Underhill

Australian and New Zealand currency is seen in Sydney, Australia. Photo / File
Australian and New Zealand currency is seen in Sydney, Australia. Photo / File

The New Zealand dollar fell against the Aussie after the market took the view that the Reserve Bank of Australia is done with cutting interest rates for now.

The kiwi fell to 93.55 Australian cents from 93.98 cents before the RBA release and from 93.99 cents late yesterday. The kiwi was little changed at 71.50 US cents from 71.51 cents late yesterday.

RBA governor Philip Lowe kept the cash rate unchanged at 1.5 per cent while citing moderate growth and a "gradual" pick up in inflation. Keeping policy unchanged was "consistent with sustainable growth in the economy and achieving the inflation target over time."

ASB Bank head of institutional foreign exchange sales Tim Kelleher says the movement in the cross rate "was a knee-jerk reaction".

See live rates for the NZ-US $ below. Click for more information:NzForex Foreign Exchange Transfers

"We're still going to have a rate cut in November and Australia will stay where it is," he said.

Traders will be watching the latest GlobalDairyTrade auction overnight and labour market data at home and in the US starting on Wednesday.

The trade-weighted index was at 77.05 from 77.07.

OMF expects an increase of 5 per cent-plus for whole milk powder and the GDT index. A recovery in dairy products provides another prop for a New Zealand economy that is being underpinned by record migration and a housing market boom.

Labour market data on Wednesday is expected to show the jobless rate fell to 5 per cent in the third quarter from 5.1 per cent, while employment growth slowed to 0.8 per cent, according to UBS. Labour costs probably remained subdued. The Reserve Bank will also be considering its latest quarterly survey of expectations out this week, which will show the extent to which low inflation expectations are becoming entrenched ahead of its monetary policy statement on Nov. 10, which is expected to include a cut to the official cash rate.

The kiwi was little changed at 58.68 British pence and steady at 65.20 euro cents. It rose to 4.8540 yuan from 4.8415 yuan. The local currency traded at 74.95 yen from 74.97 yen.

New Zealand's two-year swap rate rose 1 basis points to 2.10 per cent while the 10-year swaps rose 3 basis points to 2.78 per cent.

(BusinessDesk)

-BUSINESSDESK

- BusinessDesk

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