Dollar tracks A$ after RBA sees signs of life, keeps rates on hold
The New Zealand dollar was in lock-step with its trans-Tasman counterpart after the Reserve Bank of Australia kept the country's key rate on hold, while acknowledging signs of life in the economy.
The kiwi traded at 93.66 Australian cents at 5pm in Wellington from 93.67 cents before the statement, up from 93.42 cents yesterday. The kiwi edged up to 86.90 US cents at 5pm from 86.86 cents at 8am from 86.57 cents yesterday.
The RBA kept the target cash rate at 2.5 percent, as expected, and kept its view rates will remain unchanged for a period of time. Governor Glenn Stevens kept his view the Australian dollar was high by historical standards, without trying to talk it down further, and acknowledged improvements in the labour market, credit growth and consumer demand. The Australian dollar was little changed at 92.81 Australian cents.
"It was slightly upbeat on the economy, noticing an improvement in the labour market, but said it would be some time before the unemployment rate fell substantially," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "On the kiwi/Aussie cross, the recent trend is a resumption of the old trend in that the cross goes higher and I don't think this RBA statement was strong enough in the positive direction to disturb that."
Government figures earlier today showed Australia's trade surplus was smaller than expected at a seasonally adjusted A$731 million in March, against expectations of A$1 billion.
Traders will be watching the dairy auction on Fonterra Cooperative Group's GlobalDairyTrade platform tomorrow to see whether prices continue to fall, ahead of a speech by New Zealand Reserve Bank governor Graeme Wheeler on the significance of dairy to the economy. Employment figures later in the day will also be watched.
The local currency gained to 88.67 yen at 5pm in Wellington from 88.23 yen yesterday, and gained to 62.61 euro cents from 62.38 cents. It increased to 51.44 British pence from 51.30 pence yesterday. The trade-weighted index advanced to 80.71 from 80.42 yesterday.