Sharechat Logo

NZ dollar gains against Aussie on downbeat RBA forecasts

Friday 8th February 2019

Text too small?

The New Zealand dollar is mixed, gaining against the Australian dollar but little changed against the greenback, after downbeat growth and inflation forecasts from the Reserve Bank of Australia.

The kiwi was trading at 67.50 US cents at 5pm in Wellington from 67.54 at 8.15am and at 95.23 Australian cents from 95.13. The trade-weighted index was at 73.23 points from 73.21.

The RBA forecasts cap off a horror week for the kiwi which has dropped nearly a cent-and-a-half from 68.96 US cents in New York last Friday.

After keeping its cash rate on hold earlier this week, the RBA's latest monetary policy statement today shows it now expects economic growth for Australia of 2.5 percent for the year ending June, down from its previous forecast of 3.25 percent.

Similarly, governor Philip Lowe now expects inflation of 1.25 percent for the same period, down from the bank's previous 2 percent expectation.

“That’s been the main thing driving the Aussie dollar lower today and that’s in the shadow of governor Lowe’s speech the other day when he switched his tone from saying the next move would be up to it could be down,” says Mitchell McIntyre, a corporate dealer at XE.

Yesterday’s “less-than-great” employment numbers are also continuing to hurt the New Zealand dollar – the December quarter unemployment rate came in at 4.3 percent, above expectations of 4.1 percent.

Making the bad news worse, the participation rate was 70.9 percent compared with market expectations of 71.1 percent.

The tone for today had already been negative with global markets turning bearish again on continued anxiety about whether the United States and China will resolve their trade differences.

China is the largest trading partner of both Australia and New Zealand and Australia is New Zealand’s second-largest trading partner.

CNBC reported overnight that President Donald Trump and China’s President Xi Jinping are unlikely to meet before the March 2 deadline Trump set for imposing more tariffs on Chinese imports into the US.

That’s because the two sides are running out of time to nut out a deal.

“People have been hoping for more progress but we haven’t really seen any,” McIntyre says.

“The antipodean currencies are a little bit loveless at the moment.”

The New Zealand dollar is at 52.12 British pence from 52.09, at 59.52 euro cents from 59.24, at 74.08 yen from 74.15 and at 4.5513 Chinese yuan from 4.5533.

The two-year swap rate fell to 1.7808 percent from 1.8072; the 10-year rate fell to 2.3925 percent from 2.4275.

(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:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report