The New Zealand dollar climbed against its trans-Tasman counterpart after the Reserve Bank of Australia minutes for its June 3 meeting showed an expectation of slower growth as the country's mining boom winds down.
The kiwi climbed as high as 92.54 Australian cents shortly after the release of the central bank's minutes and was trading at 92.48 cents at 5pm in Wellington, up from 92.25 at 8am and 92.31 cents at 5pm yesterday. The kiwi fell to 86.58 US cents at 5pm, from 86.78 cents at 8am and 86.85 cents yesterday.
The Australian central bank kept the target cash rate at a record low of 2.5 percent this month as it attempts to stimulate the nation's sluggish economy. Today's minutes showed the bank thinks Australian economic growth may be slightly below trend, as it expects "substantial falls in mining investment, below-average growth of public demand and non-mining investment remaining subdued for a time".
"The RBA released its minutes this afternoon. They didn't say much different about the currency, but there were some hints that they were slightly less positive on the economy," said Raiko Shareef, a currency strategist at Bank of New Zealand. "The kiwi/Aussie has had a bit of a move, and that's largely driven off the weakness of the Aussie dollar."
In contrast, the Reserve Bank of New Zealand last week hiked rates for a third time this year to 3.25 percent and affirmed its track for future increases, while Thursday's gross domestic product figures are expected to show the economy growing at a 3.1 annual pace in the first quarter.
"From a global investors perspective New Zealand has pretty good appeal from the interest rate side and also combined with the fact the New Zealand dollar currency volatility is at an all time low," Shareef said.
The kiwi was little changed at 51.01 British pence at 5pm in Wellington from 51.09 pence this morning, and 51.13 yesterday and slipped to 63.84 euro cents from 63.93 cents this morning and 64.12 cents yesterday. It traded at 88.26 yen from 88.34 yen this morning and the same level yesterday. The trade-weighted index was little changed at 80.70 from 80.76 this morning, and 80.85 yesterday.
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