NZ dollar gains vs. Australian currency ahead of RBA speech, FOMC

Tuesday 29th October 2013

The New Zealand dollar rose against its Australian counterpart and recovered against the greenback ahead of a speech by Reserve Bank of Australia governor Glenn Stevens and as traders look ahead to the two-day Federal Reserve meeting.

The kiwi traded at 86.64 Australian cents from 86.44 cents in Asia yesterday. The local dollar traded at 83.03 US cents from 83.07 cents. The trade-weighted index rose to 76.37 from 76.24.

Stevens' speech will be his first opportunity to comment since figures last week showed Australia's quarterly inflation accelerated to 1.2 percent in the third quarter, faster than expected, from 0.4 percent in the second, as fuel prices jumped. The figures spurred traders to reduce bets the RBA will cut interest rates again this year.

The Federal Open Market Committee isn't expected to change its stimulus programme after this week's meeting and the Reserve Bank of New Zealand will hold rates at a record low 2.5 percent when it decides the official cash rate on Thursday, according to 12 economists polled by Reuters.

"Heading into Thursday's (RBNZ) meeting the market is pricing just over a 50 percent chance of a first 25 basis point OCR move by March next year, and around 85 basis points of hikes in the coming 12 months," Kymberly Martin, strategist at Bank of New Zealand, said in a note. "With nothing scheduled on the domestic agenda today, any triggers for the cross will likely need to come from across the Tasman."

The local currency slipped to 80.99 yen from 81.06 yen and was little changed at 60.15 euro cents. It held at about 51.38 British pence.

BusinessDesk.co.nz

Comments from our readers

No comments yet