NZD slightly weaker against Aussie after Liberals' surprise victory

Monday 20th May 2019

The New Zealand dollar was slightly weaker against its trans-Tasman counterpart - and may come under more pressure - after Australia's centre-right government won a surprise election victory over the weekend.

The kiwi was trading at 94.27 Australian cents at 8am versus 94.35 Australian cents late Friday in New York. It was at 94.93 Australian cents at 5:05pm in Wellington Friday.

Despite trailing in most opinion polls, Australia's Prime Minister Scott Morrison waged a relentless attack on the Labor Party’s progressive agenda to take action on climate change and strip tax perks from wealthy Australians, according to Bloomberg. At the same time, the government ran on its record of economic management, across-the-board tax cuts and a return to a budget surplus.

"The cross is likely to move lower with PM Scott Morrison’s surprising victory whilst US-China trade headlines will continue to weigh on both currencies. Expect some AUD strength in the near-term," said ANZ FX/rates strategist Sandeep Parekh.

The kiwi was slightly higher against the greenback but Parekh said escalating tension in the US-China trade situation and better than expected US data will keep it under pressure.

The kiwi was at 65.31 US cents from 65.19 late Friday in New York. The trade weighted index was at 72.09 from 72.07.

This week's Federal Open Market Committee minutes - due early Thursday New Zealand time - will be closely watched as will a raft of Fed speakers at the Atlanta Fed's annual meeting. Fed chair Jerome Powell will speak on "Assessing Risks to our Financial System" later today in the US.

The New Zealand dollar was trading at 51.28 British pence from 51.34. It was at 58.54 euro cents from 58.53, at 71.97 yen from 71.75 and at 4.5169 Chinese yuan from 4.5190.

(BusinessDesk)

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