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
Most listened to
- Trilogy International CEO Angela Buglass on tripling her profit
- Eroad CEO Steven Newman talks about his company's revenue increase
- What do the latest terrorism attacks in Mali and Israel mean? Nathan Smith discusses the latest foreign affairs news
- NZ Windfarms departing director Michael Stiassny speaks out after board exit
- James Mayo talks about SOS Hydration's growth plans after Snowball offer
- Michael Wood on whether he would run in Mt Roskill
- SAFE's Abi Izzard quizzed over protest of a caged hen operation at Pukekohe
- Nevil Gibson talks about Editor's Insight on the planned $US150 million merger between Pfizer and Allergan
- Taupo Beef’s Mike Barton on how to extract sustainable profit from farming
- Will the government lose on RMA reform? Rob Hosking outlines the PM's speech
- How could bookmakers recoup $16 million? Racing Board chief executive John Allen explains
- Nevil Gibson breaks down the latest aviation news