NZ dollar gains against Aussie on muted Australian wage growth
By Rebecca Howard
Nov. 14 (BusinessDesk) - The New Zealand dollar gained against the Australian dollar after wage growth across the Tasman
remained muted in the third quarter.
The kiwi traded at 93.81 Australian cents at 5 pm in Wellington from 93.71 Australian cents at 8.30 am and from 93.37
cents late Tuesday. It was at 67.78 US cents versus 67.10 US cents late Tuesday.
Australian wages rose by a seasonally adjusted 0.6 percent in the three months through September from the second
quarter, and rose by 2.3 percent from a year earlier, the Australian Bureau of Statistics said Wednesday. The move was
largely in line with expectations, although some economists had tipped it to be higher.
The increase is "nothing to get excited about as it was partly driven by an increase in the minimum wage. What’s more,
subdued growth in real wages means that households may soon start to respond to falling house prices by curbing
spending," said Marcel Thieliant, senior Australia and New Zealand economist for Capital Economics.
ANZ Bank New Zealand senior strategist Phil Borkin said the disappointing data followed a relatively upbeat attitude to
the Australian economy in recent times.
"Relative to expectations, things are just disappointing a touch," he said. In New Zealand, meanwhile, the data is
surprising to the upside, said Borkin.
The kiwi gained against the greenback as markets grew more optimistic about a revival of trade talks between the US and
China.
However, the kiwi could fall against the Aussie if there is a dramatic improvement in the global trade dynamic, as trade
tensions have weighed more on the Australian dollar than the New Zealand dollar to date, said Borkin.
For now, things are relatively cautious, he said. "Markets aren't prepared to jump on that bandwagon until we see some
concrete terms."
He said the upcoming G20 meeting at the end of this month is the key focus, given US President Donald Trump and Chinese
leader Xi Jinping are due to meet.
Domestically, markets will be looking ahead to the central bank's financial stability report on Nov 28, where the RBNZ
is widely expected to further loosen its lending curbs on high-risk mortgages. "The surprise now would be if they
didn't," Borkin said.
The New Zealand dollar traded at 52.11 British pence from 52.36 pence Tuesday, and was at 59.99 euro cents from 59.96.
The kiwi was at 4.7092 Chinese yuan from 4.6913 yuan and at 77.19 yen from 76.91 yen.
The trade-weighted index was at 74.20 from 73.97.
New Zealand's two-year swap rate fell 2 basis point to 2.17 percent; the 10-year swaps were down 4 basis points at 3.04
percent.
(BusinessDesk)