The New Zealand dollar fell against its Australian counterpart after the Reserve Bank of Australia kept interest rates on hold as inflationary pressures start to emerge across the Tasman.
The kiwi fell to 79.21 Australian cents at 5pm in Wellington from 79.53 cents immediately before the RBA announcement and 79.65 cents yesterday. It rose to 82.62 US cents at 5pm from 82.44 cents at 8am and 82.51 cents yesterday.
The RBA kept the target cash rate at 3.25%, dashing expectations of a quarter-point cut in a Reuters survey of economists. RBA governor Glenn Stevens said "recent outcomes on inflation were slightly higher than expected" and the new carbon tax is expected to lead to higher consumer prices.
A soft labour market containing wage pressures and "some continuing improvement in productivity performance will be needed to keep inflation low", he said.
The Australian dollar climbed to $US1.0424 at 5pm in Wellington from $US1.0367 immediately before the announcement.
The statement "didn't give a strong impression one [a rate cut] was imminent", which surprised the majority of the market, says Imre Speizer, market strategist at Westpac Banking Corp in Auckland. If the RBA does not cut the rate next month, "the Aussie's going to outperform the kiwi, for sure".
New Zealand's first tranche of September quarter employment figures were in line with expectations today, with the labour cost index showing quarterly private sector wage inflation of 0.5.
The quarterly employment survey reported a 0.3% pick-up in total filled jobs on the strength of more part-timers.
Investors are gearing up for the US to hit the polls today, with the presidential race between incumbent Democrat Barack Obama and Republican contender Mitt Romney finely balanced.
President Obama pulled ahead of Mr Romney in an October 31 to November 3 national poll conducted by the Pew Research Center, favoured by 48% against 45%, compared to a deadlock of 47% a week ago.
The kiwi rose to 64.57 euro cents from 64.34 cents yesterday and rose to 51.69 British pence from 51.48 pence. It fell to 66.19 yen from 66.43 yen, and the trade-weighted index was at 73.92 from 73.95.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Warminger stood to gain significant bonus, court hears
- Mortgage rates have bottomed, regardless of further OCR cuts
- Where polls stand on the eve of the first US presidential debate
- 'Real housewife' lawyers up, accuses Devoy of bullying, defamation
- Sky will take a gamble and put Westworld, aka 'the next Game of Thrones' on Neon
Most listened to
- FMA counsel Justin Smith QC described Mr Warminger’s background and the pressure he was under to perform
- Media Snapchat: NBR’s Nick Grant ponders the Human Rights Commission’s role in RHOAKL racism row
- ASB's Jane Turner discusses what's behind NZ's widest month trade deficit
- Kathmandu's Xavier Simonet and Reuben Casey talk through the retailer's results.
- BNZ's Kymberly Martin and Massey University's David Tripe on mortgage rates.