Tuesday 5th February 2019 |
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The New Zealand dollar eased against the greenback but stuck to a tight range against the Australian dollar ahead of the Reserve Bank of Australian cash rate decision due this afternoon.
The kiwi traded at 95.25 Australian cents at 8am in Wellington from 95.30 Australian cents at 5pm yesterday. It was at 68.76 US cents versus 68.92 at 5pm yesterday.
The US dollar continued to gain some ground as investors took heart after strong US jobs numbers late last week and as "sentiment has been soothed by the cordial tone to last week’s trade dialogue between the US and China, although there has been little in the way of news on this front," said ANZ Bank foreign exchange rates strategist Sandeep Parekh.
He said, however, the main event will be the RBA's decision at 4:30pm New Zealand time and "Kiwi could push higher against AUD today, with the RBA expected to acknowledge recent deterioration in the data flow."
Capital Economics senior Australia and NZ economist Marcel Thieliant said the RBA will probably reduce its GDP growth forecasts "but should still signal that the next move in rates will be up."
He notes that recent economic activity has been disappointing and "we believe the bank continues to underestimate the threat from the weaker housing market." As a result, Thieliant expects the Bank to lower interest rates to 1.25 percent by the end of the year and follow up with an additional 25 basis point cut in the first half of next year. He forecasts the Australian dollar will fall to 60 US cents by year-end. It is currently trading at 72.21 US cents.
Investors will also be digesting the 76 recommendations from Australia's royal commission on banking, with the Australian federal government pledging to "take action" on all of them.
The trade-weighted index was at 74.20 from 74.28.
The New Zealand dollar traded at 75.54 yen from 75.53 yen. It was unchanged at 52.70 British pence and traded at 60.14 euro cents from 60.19 euro cents and at 4.6362 Chinese yuan from 4.6463.
(BusinessDesk)
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