You are using an older browser version. Please use a supported version for the best MSN experience.

Rate cut speculation helps drive NZD up

NZ NewswireNZ Newswire 2/05/2016

Rate cut speculation helps drive NZD up © Reuters / David Gray Rate cut speculation helps drive NZD up The New Zealand dollar rose above 92 Australian cents for the first time since early March on speculation softer inflation data across the Tasman and weaker demand in China may prompt the Reserve Bank of Australia to cut its benchmark interest rate tomorrow.

The kiwi traded at 91.96 Australian cents at 5pm in Wellington, having earlier gained to as high as 92.20 cents, from 91.08 cents at the end of last week.

The local currency rose as high as 70.19 US cents, a two-week high, and was recently at 69.91 cents, up from 69.73 cents at the New York close on Friday.

The Australian dollar has fallen since figures last week showed inflation fell in the March quarter for a lower-than-expected annual gain, raising questions about whether inflation will return to its long-term average as fast as the RBA expects.

Also weighing on the Australian dollar, Chinese PMI data at the weekend showed manufacturing activity slowed in April, which may point to waning demand for Australia's coal and iron ore.

The chances of a rate cut "are at about 50-50 for tomorrow. If they don't go then we're going to see that (kiwi-Aussie) cross rate come off pretty hard," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

The RBA's decision was a "line-ball call" and a cut "puts pressure on the RBNZ to go to," he said.

The New Zealand dollar fell to 60.96 euro cents from 61.22 cents on Friday and declined to 74.50 yen from 74.77 yen. It rose to 4.5258 yuan from 4.5155 yuan. The kiwi rose to 47.85 British pence from 47.60 pence. The trade-weighted index rose to 73.51 from 73.31 at the end of last week.

The two-year swap rate fell 1 basis point to 2.23 per cent and the 10-year swaps fell 2 basis points to 2.95 per cent

image beaconimage beaconimage beacon