NZ dollar gains vs Aussie as RBA avoids talk of rate hikes, keeps policy in neutral
By Paul McBeth
July 5 (BusinessDesk) - The New Zealand dollar gained against its trans-Tasman counterpart as the Reserve Bank of
Australia retained a neutral bias while keeping its cash rate unchanged yesterday, putting it at odds with major central
banks that are talking up the prospect of rate hikes.
The kiwi rose to 95.74 Australian cents as at 8am in Wellington from 95.31 cents late yesterday. The local currency
traded at 72.86 US cents from 72.70 cents yesterday with financial markets in the world's biggest economy closed for the
July 4 Independence Day holiday.
The RBA kept its target cash rate 1.5 percent yesterday, as expected, but surprised some investors by reiterating
guidance that it anticipated keeping rates on hold for some time. A recovery in iron ore prices had some questioning
whether the RBA would join other central bankers in noting a growing inflation trend that could prompt rates to rise
after a near-decade of extraordinarily loose monetary policy. Sweden's Riksbank was the latest in adding its voice to
the chorus, with governor Stefan Ingves saying while there was no immediate need to hike rates they'll probably start
moving next year.
"The RBA didn’t follow the seemingly coordinated change in guidance from other global central banks over the past week
or so, very much sticking to its previous script," Bank of New Zealand economist Doug Steel said in a note. "NZD/AUD
popped higher post-RBA and has ground higher overnight."
The kiwi didn't budge after the latest GlobalDairyTrade auction where the trade-weighted price for dairy products
slipped 0.4 percent, although prices for whole milk powder - New Zealand's key export commodity - rose 2.6 percent to
US$3,111 a tonne. Separately, Quotable Value housing data showed a continuing slowdown in the pace of house price
inflation.
In local data today, the ANZ Commodity Price Index for June is scheduled for release at 1pm.
The trade-weighted index increased to 78.35 from 78.08 yesterday The kiwi gained to 4.9547 Chinese yuan from 4.9406
yuan, advanced to 64.23 euro cents from 63.93 cents and increased to 56.39 British pence from 56.15 pence. The kiwi
gained to 82.54 yen from 82.24 yen yesterday.
(BusinessDesk)
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