NZ dollar falls to 4-month low vs Aussie on stronger metals, ore prices, rates outlook

The New Zealand dollar fell to its lowest level in almost four months against the Australian dollar, which is benefitting from stronger prices of metals and iron ore, and an upbeat view of the Australian economy from its central bank.

The kiwi fell as low as 93.35 Australian cents, the lowest since late October, and was at 93.55 Australian cents as at 8am in Wellington from 93.66 cents in late New York trading on Friday. The kiwi dropped to 71.89 US cents from 71.99 cents on Friday in the US.

The CRB Index of 19 commonly traded commodities reached its highest level in almost two weeks on Friday and iron ore prices have reached their highest levels in more than two years. Rising commodity prices delivered a record trade surplus for Australia in December. Meanwhile, the Reserve Bank of Australia is predicting the economy will rebound after a contraction in the third quarter, making further rate cuts across the Tasman less likely.

"The RBA’s upbeat view of the Australian economy certainly doesn’t indicate it feels the need to ease policy any further, against the belief of many Australian economists," said Jason Wong, currency strategist at Bank of New Zealand, in a note.

In New Zealand, traders will be watching for the January retail spending on electronic cards this morning, with a gain of 0.6 percent expected. Globally, the major event is likely to be US Federal Reserve Chair Janet Yellen's testimony before the Senate Banking Committee on Tuesday and before the House Financial Services Committee on Wednesday.

The greenback has strengthened after US President Donald Trump hinted last week that he will soon announce tax cuts in the US, which helped drive US equity benchmarks to new highs on Friday. Reports of positive talks between Trump and leaders of China and Japan have also helped underpin the US dollar.

The trade-weighted index was at 78.37, little changed from Friday.

The kiwi traded at 57.59 British pence, little changed from US trading at the end of last week and up from 57.49 pence in Asia on Friday. It rose to 67.64 euro cents from 67.59 cents, gained to 81.68 yen from 81.43 yen and traded at 4.9456 yuan from 4.9477 yuan.

BusinessDesk.co.nz

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.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.