Dollar drops to two-month low against Aussie ahead of RBA minutes
The New Zealand dollar dropped to a two-month low against the Australian currency ahead of today's release of the Reserve Bank of Australia's minutes of its meeting this month which is expected to confirm positive sentiment about the economy's revival.
The kiwi touched 91.87 Australian cents overnight, its lowest level since Feb. 20. The local currency was at 92.05 Australian cents at 8am in Wellington from 92.38 cents at 5pm yesterday. The New Zealand dollar edged lower to 86.78 US cents from 86.82 cents yesterday.
The Reserve Bank of Australia on April 1 kept the bank's benchmark interest rate unchanged at 2.5 percent and signalled rates were likely to remain stable as the economy rebalanced away from mining investment. Investors are gaining confidence about a revival in the Australian economy as recent indicators such as gross domestic product beat expectations.
"Recent communication from the RBA has been relatively more upbeat with Governor (Glenn) Stevens suggesting a fair degree of optimism over the handover of growth from mining to other sectors of the economy," ANZ Bank New Zealand senior economist Mark Smith and senior foreign exchange strategist Sam Tuck said in a note.
Traders will be looking for insights into the bank's view on whether recent strength in the Australian dollar will hamper the economy's ability to achieve more balanced growth, and whether it has any concerns about the housing market, ANZ said.
The minutes are due out at 1:30pm New Zealand time and RBA assistant governor Guy Debelle is scheduled to give a speech on the Australian bond market at 2:30pm.
ANZ expects the kiwi to trade between 91.80 Australian cents and 92.80 cents today.
Tonight, UK and US March inflation reports are scheduled for publication and US Federal Reserve chair Janet Yellen speaks at the Financial Markets Conference.
The New Zealand dollar rose to 62.80 euro cents from 62.66 cents yesterday after European Central Bank president Mario Draghi signalled at the weekend that the bank may add further stimulus to bolster inflation.
The local currency advanced to 88.32 yen from 88.20 yen yesterday and was little changed at 51.87 British pence from 51.88 cents. The trade-weighted index was unchanged at 80.45.