CANBERRA: The New Zealand dollar rose to a new post-float high against the Australian dollar as traders looked ahead to non-farm payrolls data in the US and what is expected to be an interest rate cut by the Reserve Bank of Australia after the long Easter weekend.
The kiwi traded at 98.51 Australian cents just after 5pm in Wellington, the closest it has come to parity since being allowed to trade freely in 1984, from 97.90 cents yesterday.
The local currency traded at 74.62 US cents from 74.75 cents yesterday.
The kiwi strengthened against the Australian dollar after figures showed Australia’s trade deficit widened for a third month in February, to A$1.26 billion, just under-shooting a Bloomberg survey forecasting a gap of A$1.3 billion.
Financial markets in Australia and New Zealand will be closed Friday for the Easter break and when the local market re-opens on Tuesday it will be on expectations the Reserve Bank of Australia will cut its cash rate a quarter point to 2 percent, compared to the New Zealand equivalent 3.5 percent.
Traders are pricing in a 73 percent chance of a rate cut on Tuesday, according to the Overnight Index Swap Curve.
“With the interest rate differential, if they do cut rates there’s a high chance we will see parity” between the kiwi and the Australian dollar, said Stuart Ive, senior dealer at OMF. “I find it hard to believe it will be sustained though.”
Ahead of the RBA, US non-farm payrolls due out Friday in the US are expected to show the world’s biggest economy added 245,000 jobs last month, although the the ADP National Employment Report on private payrolls showed a lower-than-expected gain of 189,000 last month, the lowest in 14 months.
