NZ dollar hits one-month high vs. Australian dollar as RBA talks down rate hikes
By Paul McBeth
Dec. 17 (BusinessWire) – The New Zealand dollar hit a one-month high against its Australian counterpart after Reserve
Bank of Australia Deputy Governor Ric Battellino talked down the prospect of further rates hikes across the ditch.
Battllino said the widening in bank funding spreads made the 3.75% cash rate more like a 4.75% rate, and that monetary
policy was now in a “normal range.” Investors pared their expectations for a fourth consecutive rate hike by the RBA in
February, with the market giving it a 40% chance of happening. The kiwi pushed up against the greenback after U.S.
inflation data damped the prospect of an early rate hike in the world’s largest economy, while the Federal Open Market
Committee retained its rhetoric that the fed funds rate will stay near-zero for “an extended period.”
The kiwi dollar’s “got a good fundamental argument in respect to the two reserve banks’ paths,” said Imre Speizer,
markets strategist at Westpac Banking Corp. “Until the RBNZ does its first couple of hikes, it’ll continue to go in the
kiwi’s favour.”
The kiwi climbed to 80.02 Australian cents from 79.87 cents yesterday and gained to 71.92 U.S. cents from 71.68 cents.
It gained to 65.18 on the trade-weighted index, or TWI, a measure of the currency against a basket of five trading
partners, from 64.93 yesterday and rose to 64.64 yen from 64.38 yen. It increased to 49.54 euro cents from 49.26 cents
yesterday and dropped 44.03 pence 44.10 pence.
Speizer said the currency may trade between 71.50 U.S. cents and 72.30 cents today, though the bias is towards the
bottom end of the range as investors continue to support the U.S. dollar.
“The bullish U.S. story is the dominant theme at play, and anything in Australian and New Zealand are on the fringes,”
he said.
The National Bank Business Outlook survey, which has a strong correlation with the NZ Institute of Economics’ Quarter
Survey of Business Opinion, comes out today, and Westpac economists predict it will remain at its elevated levels.
Norway’s Norges Bank boosted its benchmark interest rate 25 points, surprising the majority of analysts who had
predicted no change, and helped the krone strengthen against the U.S. dollar. The kiwi was unchanged at 4.15 kroner.
(BusinessWire)