The New Zealand dollar was little changed against its trans-Tasman counterpart after the Reserve Bank of Australia kept rates on hold, while becoming a little more pessimistic about the nation's labour market.
The kiwi traded at 89.77 Australian cents at 5pm in Wellington from 89.76 cents immediately before the release, and up from 89.62 cents yesterday. The kiwi fell to 83.48 US cents from 83.76 cents at 8am and 83.73 cents yesterday.
The RBA kept the target cash rate at 2.5 percent as expected, while governor Glenn Stevens said unemployment increased despite some improvement in other labour market measures. Stevens said the Australian dollar was fundamentally overvalued, having previously said it was high by historic standards. The Australian dollar was little changed at 92.98 US cents at 5pm in Wellington from 93.02 cents immediately before the release. Both the trans-Tasman currencies came under pressure after Australian Bureau of Statistics figures revised up Australia's current account deficit in the first quarter, offsetting a smaller than expected shortfall in the second quarter.
"At the margins it (the RBA statement) was slightly more negative than positive," said Michael Johnston, senior dealer at HiFX in Auckland. "If I was an exporter, I would be looking to buy kiwi in the short-term in the low 83s, and anything approaching 84 is a sell."
New Zealand commodity prices fell for a sixth month, according to the ANZ Commodity Price index today, led by declining dairy prices, due in part to an oversupply in China. The survey comes ahead of Fonterra Cooperative Group's GlobalDairyTrade auction tomorrow, which is being watched as a gauge of New Zealand's economic strength, with dairy the nation's biggest export. Government figures yesterday showed the terms of trade unexpectedly rose 0.3 percent in second quarter, as a strong kiwi made imports cheaper and offset declines in export prices.
The local currency rose to 87.48 yen at 5pm in Wellington from 87.23 yen yesterday, and was little changed at 63.62 euro cents from 63.78 cents. It edged lower to 50.34 British pence from 50.44 pence. The trade-weighted index was at 79.03 from 79.10 yesterday.