WELLINGTON: The New Zealand dollar edged lower against the Aussie as traders position themselves for the Reserve Bank of Australia’s interest rate decision today.
The kiwi slipped to 95.90 Australian cents at 8am in Wellington from 96.15 cents at 5pm yesterday.The local currency was little changed at 75.26 US cents from 75.25 cents yesterday.
The local focus today is on the RBA’s interest rate decision, where traders are pricing in a 75 per cent chance of a rate cut, after the bank unexpectedly kept the benchmark on hold at last month’s meeting.
Still, a minority are betting the RBA could remain on hold on concern that pushing the benchmark rate to a record low 2 per cent could further fuel a bubbling housing market.
“With a housing boom in full force and with many Australians now using their superannuation pension accounts to finance further real estate activities, the RBA is justifiably concerned about the negative effects of lower rates on the already dangerous housing bubble,” Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said in a note.
“That’s why (today’s) decision may be closer than the market thinks and the monetary authorities in Sydney may choose to remain stationary for another month more.”
BK Asset Management is betting the RBA will either leave rates unchanged or lower them and move to a neutral bias.The RBA decision is scheduled for release at 4:30pm New Zealand time. Australia also has data on the services industry, new home sales and trade today.
Auckland real estate agency Barfoot & Thomson is due to publish its latest monthly housing market data today, and the Motor Industry Association is also due to provide its monthly data on new vehicle sales.
Overnight, the focus will be on the latest GlobalDairyTrade auction where prices are expected to decline.
Dairy products are New Zealand’s largest commodity export. The New Zealand dollar advanced to 67.47 euro cents from 67.22 cents yesterday.
It edged up to 49.75 British pence from 49.65 pence yesterday and was little changed at 90.36 yen from 90.35 yen.The trade-weighted index was at 78.04 from 78 yesterday.
