Sharechat Logo

NZ dollar gains against Aussie as Westpac picks two RBA rate cuts

Wednesday 24th July 2019

Text too small?

The New Zealand dollar gained against the Aussie after Westpac Banking Corp's chief economist said he now expects Australia's central bank to cut rates twice more.

The kiwi was trading at 95.86 Australian cents at 5pm in Wellington versus 95.70 cents at 8am. It was at 66.95 US cents versus 67.02 cents, and the trade-weighted index eased to 73.39 points from 73.42.

Australia’s central bank will lower interest rates twice more and could adopt a package with the second easing to allow lenders to pass on the reduction in full, Westpac chief economist Bill Evans said, according to Bloomberg.  

Imre Speizer, senior market strategist at Westpac New Zealand, said Evans now expects the RBA to cut by 25 basis points in October, or possibly September, and follow that up with another 25-point cut in early 2020. He had previously forecast one rate cut in November to 0.75 percent.  

"That will take the rate to 0.5 percent and our chief economist then spoke of the merits of accompanying that second rate cut with quantitative easing," said Speizer.

Speizer said the kiwi will likely remain under pressure against the greenback, given the US dollar is benefiting as markets back away from the idea of a steep rate cut by the US Federal Reserve early next week. The Fed, however, is still expected to cut rates by 25 basis points but "probably won't be as dovish as the market was expecting." 

"On the kiwi side, we have the reserve bank (meeting) in a couple of weeks and they will cut and we are in a soft patch in the economy so there hasn't really been any good news to cheer up the kiwi," he said. "I think it will pull back a couple of cents at least" in the medium term, he said. 

The kiwi was at 53.82 British pence from 53.90, at 60.05 euro cents from 60.11, at 72.38 yen from 72.56 and at 4.6062 Chinese yuan from 4.6108. 

The New Zealand two-year swap rate was at 1.2927 percent from 1.3000 yesterday while the 10-year swap rate was at 1.7275 percent from 1.7225.

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Rio Tinto decision following strategic review of Tiwai
Contact says smelter closure is ‘disappointing’
South Port (SPN) Statement on NZAS Tiwai Point Aluminium Smelter Closure
Rio Tinto announcement on Tiwai Aluminium Smelter
Me Today announces equity raising to accelerate growth
Scott Technology Trading Update; Rising to the COVID Challenge
New non-binding indicative offer received from apvg, shareholder meeting deferred
U.S. Added 4.8 Million Jobs in June as Reopened Businesses Rehired
Auditors have a duty to be alert to fraud
Strong sales recovery but uncertainty remains over economic outlook and potential second wave of COVID-19

IRG See IRG research reports