The New Zealand dollar rose against the Aussie dollar after Australian wages accelerated by less than expected in the third quarter, despite a lift in the minimum wage.

The kiwi was trading at 90.56 Australian cents as at 5pm in Wellington from 89.99 cents late yesterday. It was at 68.71 US cents from 68.68 cents yesterday.

Australian wages rose a seasonally adjusted 0.5 per cent on the quarter and 2.0 per cent from a year earlier, the Australian Bureau of Statistics said Wednesday. Economists had expected wages to rise by 0.7 per cent on quarter and 2.2 per cent on-year, according to Reuters. The Fair Work Commission decided to raise the minimum wage by 3.3 per cent this July, the largest rise since 2011.

"We had expected to see a pickup in wage costs, technically due to the rise in minimum wage," said Robert Rennie, chief currency strategist at Westpac Banking Corp in Sydney.

Advertisement

That didn't happen which "continues to drive a key message. There is little or no wage growth here," he said.

That, coupled with weaker-than-expected inflation across the Tasman and the Reserve Bank of Australia's recent forecasts that core inflation won't reach the floor of its 2-to-3 percent target band until early 2019 - a year later than previously hoped - are why the kiwi is outperforming the Australian dollar, he said.

Otherwise, he said the New Zealand dollar was very quiet, largely overlooking what he said was "mixed" housing data.

A total of 5,689 properties were sold across the country in October versus 6,759 in October a year ago, the Real Estate Institute of New Zealand said.

However, the REINZ house price index edged up 0.2 per cent in October from September to a fresh record of 2,708. Seven regions reached new highs during October "indicating strong value growth across most of the country," the institute said

While prices lifted slightly, outside of Auckland, volumes remain "subdued" said ASB Bank economist Kim Mundy. "Given the uncertainty around impacts of incoming housing policies, we expect ongoing caution to continue to further weigh on turnover and price growth, said Mundy.

Looking ahead, Rennie said markets will be watching for CPI, PPI and retail sales data out of the US later in the global trading day.

The kiwi traded at 52.28 British pence from 52.35 pence late yesterday. It was at 4.5556 yuan from 4.5597 yuan at 77.72 yen versus 78.01 yen.

The trade-weighted index was at 72.90 from 72.94.

New Zealand's two-year swap rate fell 2 basis points to 2.17 per cent while 10-year swaps fell 4 basis point to 3.17 per cent.