Wednesday 19th June 2013
|Text too small?|
The New Zealand dollar rose to a three-week high against the Australian currency after yesterday's minutes of the latest Reserve Bank of Australia meeting confirmed it is likely to cut interest rates in the future and expects the Aussie to decline further.
The kiwi rose as high as 84.56 Australian cents, its highest since it touched 84.61 cents on May 29. The local currency recently bought 84.22 Australian cents from 83.87 at 5pm yesterday. The trade-weighted index was little changed at 74.12 from 74.06 at 5pm yesterday.
Australia's central bank, which has cut borrowing costs by 2 percentage points over the past 20 months, is likely to further reduce its benchmark rate as it tries to spur industries such as construction to pick up pace while mining investment peaks. In contrast, New Zealand is expected to hike rates as inflationary pressures from the Canterbury rebuild and Auckland housing pressures spill over to the rest of the economy and the growth outlook is buoyed by demand for the nation's food products.
"Yesterday's RBA minutes confirmed a somewhat-softened easing bias," Bank of New Zealand strategist Kymberly Martin said in a note. "The RBA appears content to let policy work through to domestic demand. It also gave the implicit green light to further AUD depreciation."
In New Zealand, prices of dairy products rose in Fonterra Cooperative Group's latest GlobalDairyTrade auction this morning, snapping three straight declines as prices rose for skim and whole milk powder.
Dairy prices remain strongly supportive of New Zealand's terms of trade, providing a decent income boost to the country and they should help to underpin the New Zealand dollar, Martin said.
Gains in the first quarter may be reflected in a mild improvement in the first quarter current account released this morning, she said.
The report, scheduled for release at 10:45am in Wellington, is expected to show the current account deficit narrowed to $600 million in the first quarter from a gap of $3.26 billion three months earlier, according to a Reuters survey.
The New Zealand dollar was little changed against the greenback, recently trading at 79.88 US cents from 79.87 cents at 5pm yesterday. Traders are looking ahead to tomorrow for comment from Federal Reserve Chairman Ben Bernanke on whether the central bank plans this year to start winding back its US$85 billion a month asset purchase programme.
Bernanke is scheduled to speak in Washington at the end of a Federal Open Market Committee two-day meeting reviewing monetary policy.
The local currency advanced to 76.16 yen from 75.72 yen and edged up to 51.04 British pence from 50.87 pence yesterday. The kiwi slid to 59.62 euro cents from 59.83 cents.
No comments yet
General Capital gives notice of Annual Meeting
Scales Corporation - Business Update
Fonterra Co-operative Group Global Dairy Update
Fonterra revises its 2019/20 and 2020/21 forecast Farmgate Milk Price ranges
Briscoe Group Limited Market update: 2nd Quarter Sales to 26 July 2020
thl market update - A frame work for 2021
Me Today - Outcome Of Share Purchase Plan Offer
Maxigesic IV® licensed in six new European nations
Evolve Shareholder Update