Tuesday 3rd September 2013
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The New Zealand dollar slipped against its trans-Tasman counterpart after the Reserve Bank of Australia kept its key interest rate on hold, while making no reference to having room to cut rates.
The kiwi fell to 86.62 Australian cents at 5pm in Wellington from 86.87 cents immediately before the release and 86.80 cents yesterday. The kiwi increased to 78.25 US cents at 5pm from 78.11 cents at 8am and 77.87 cents yesterday.
The RBA kept the target cash rate at 2.5 percent, with governor Glenn Stevens saying the looser monetary policy was supporting interest-sensitive spending and asset values, and more was expected. Household borrowing was still subdued, though the bank saw signs of increasing demand, and the RBA's board will continue to adjust policy settings to foster growth and keep a lid on inflation, Stevens said.
"People are looking for the relative strength of the RBA's easing bias and the RBNZ's tightening bias," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia. "The MPS (monetary policy statement) and the RBA minutes would be of more influence on the cross rate."
The Reserve Bank of New Zealand will publish its full monetary policy statement on Thursday next week, providing its first set of forecasts since rolling out macro-prudential tools to limit the level of low-equity home lending private lenders can write.
Today's RBA meeting is the first of several central bank reviews this week, including Europe, England, Japan and Canada.
Investors will be looking at US manufacturing figures in Washington on Tuesday when Wall Street re-opens after the Labor Day holiday yesterday.
"We could see the US dollar firm if we get decent data," Tennent-Brown said.
The local currency rose to 77.81 yen at 5pm in Wellington from 76.77 yen yesterday and advanced to 59.33 euro cents from 58.98 cents. It gained to 50.31 pence from 50.06 pence yesterday. The trade-weighted index increase to 74.21 from 73.86 yesterday.
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