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NZD falls vs Aussie after RBA data release

NZ NewswireNZ Newswire 17/05/2016 Jonathan Underhill

NZD falls vs Aussie after RBA data release © Daniel Acker/Bloomberg News NZD falls vs Aussie after RBA data release The New Zealand dollar declined against its Australian counterpart after minutes of the last Reserve Bank of Australia meeting showed some reluctance to cut rates at the May 4 meeting and extended its decline after a survey showed inflation expectations remain weak.

The kiwi fell to 92.50 Australian cents as at 5pm in Wellington, from 92.96 cents on Monday. It rose to 68.05 US cents, having lifted with the Australian after the RBA minutes, before retreating after the Reserve Bank's quarterly survey of expectations, from 67.71 cents.

The Australian dollar jumped almost 1 US cents after the minutes of the May 3 RBA board meeting showed there was some reluctance to cut the cash rate with some preferring to wait for more data, although the bank did cut the rate to a record low 1.75 per cent.

That rate cut opened up a 50 basis point gap with the Reserve Bank of New Zealand's rate.

"The market read the RBA minutes as the RBA rate cut call was closer than expected. the Aussie dollar rallied on the back of that and dragged the kiwi up," said Tim Kelleher, head of institutional FX sales at ASB Bank.

"The inflation expectations came out and the kiwi drifted off a bit. Inflation was hardly up so it doesn't show any great signs of recovery" and lifts the chances of a rate cut in June.

Traders will now be looking ahead to the GlobalDairyTrade auction overnight, given the importance to New Zealand's economy of its biggest export, dairy products.

The trade-weighted index rose to 72.71 from 72.55. The New Zealand dollar advanced to 60.16 euro cents from 59.86 cents, increased to 4.4361 yuan from 4.4184 yuan and was little changed at 47.03 British pence from 47.13 pence.

The kiwi rose to 74.18 yen from 73.62 yen.

The two-year swap rate rose 2 basis points to 2.21 per cent and the 10-year swaps rose 4 points to 2.86 per cent.

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