WELLINGTON: The New Zealand dollar has weakened against the Australian dollar as traders have already priced in an interest rate cut by the Reserve Bank of Australia.
The kiwi slipped to 96.64 Australian cents at 8am in Wellington, from 96.88 cents at 5pm on Monday. The local currency declined to 75.09 US cents from 75.21 cents after US manufacturing data met expectations, bolstering optimism about the outlook for the world’s largest economy. In local trading on Tuesday, all eyes will be on the RBA’s interest rate decision after the central bank surprised some economists last month by cutting its benchmark rate to a record low 2.25 per cent.
Then it said weak domestic demand and tame inflation in the face of falling crude oil prices will keep output growth below trend for longer. “With the market now pricing around a 60 per cent chance of a cut today, we are all but guaranteed a significant Australian dollar reaction whatever the RBA does,” said Bank of New Zealand’s Kymberly Martin. “If the RBA were to deliver a cut the NZD/AUD cross would be a likely beneficiary and vice versa.” The RBA will release its decision at 4.30pm New Zealand time.
In New Zealand, the latest monthly ANZ commodity price index is scheduled for publication and state valuer Quotable Value is due to release its monthly house data. The focus overnight will be on the fortnightly GlobalDairyTrade auction. The New Zealand dollar slipped to 67.08 euro cents from 67.29 cents following better-than-expected European inflation and employment data. The kiwi was little changed at 48.85 British pence from 48.84 pence, and at 90.15 yen from 90.12 yen. The trade-weighted index slipped to 78.20 from 78.36.
