The New Zealand dollar rose against the Australian dollar after New Zealand’s Reserve Bank kept interest rates on hold as speculation grew that the Reserve Bank of Australia will cut rates next week.
The kiwi jumped to 96.40 Australian cents at 8am in Wellington, from 95.22 cents at 5pm on Thursday. The local currency edged up to 76.31 US cents from 76.17 cents.
The Australian dollar weakened amid growing speculation that the RBA will cut its benchmark interest rate to a record low 2 per cent at its Tuesday meeting.
In a report out of Australia cited by traders overnight, The Age newspaper’s economics editor Peter Martin said concern about a deteriorating economic outlook and a resurgent Australian dollar will force the RBA to cut interest rates.
Traders are pricing in a 62 per cent chance of an interest rate cut at the meeting, according to the Overnight Index Swap Curve.
“Post the Reserve Bank of New Zealand, markets abruptly switched attention to Tuesday’s RBA meeting, increasing the odds of a May cut and selling AUD crosses,” ANZ Bank said.
“We also expect a cut, as do 24 of 28 economists surveyed by Bloomberg.”
In New Zealand, state valuer Quotable Value will publish its housing data for April and Finance Minister Bill English will give a pre-budget speech to the Wellington Employers’ Chamber of Commerce.
In Australia, data is released on manufacturing, house prices, producer prices and commodity prices.
Traders will also be eyeing the release of China’s April performance of manufacturing index.
The New Zealand dollar slipped to 67.95 euro cents from 68.57 cents, gained to 49.70 British pence from 49.38 pence and advanced to 91.10 yen from 90.35 yen. The trade-weighted index gained to 78.71 from 78.41.
BusinessDesk
