Kiwi weakens against $A on RBA easing bias
The New Zealand dollar weakened along with the Australian dollar after the Reserve Bank of Australia indicated it still has an easing bias, stoking speculation it will cut interest rates next month and eroding the appeal of the down-under currencies.
The kiwi fell to 81.56 US cents from 81.86 cents at 5pm in Wellington yesterday and the trade-weighted index dipped to 73.28 from 73.44. The Australian dollar weakened to $US1.0368 from $US1.0413.
The minutes of the Australian central bank's November 6 meeting, released yesterday, showed the bank thought that more interest rate cuts may be needed to enliven the economy as spending in the resources sector wanes.
Australia is New Zealand's biggest market and the two currencies are often tarred with the same brush.
Westpac Banking Corp economists expect the RBA will cut the cash rate from 3.25% when it meets next month and "if anything became more confident in their forecasts" after the minutes were released, says Imre Speizer, a strategist at the bank.
The kiwi and Australian dollars suffered even in the face of more positive global news overnight, including comments from Hamas that Palestinians are willing to accept a ceasefire with Israel, the Spanish Treasury sold 4.94 billion euros of bills, exceeding its target, and as European finance ministers meet in Brussels to discuss ways to fill a 15 billion euro gap in Greece's public accounts.
"The Aussie and the kiwi performed poorly overnight even though the news flow was positive," Mr Speizer says.
Stocks fell on Wall Street even after figures showed new home building rose to a four-year high last month.
The kiwi fell to 63.67 euro cents from 63.90 cents and dropped to 51.18 British pence from 51.43 pence. It was little changed at 78.60 Australian cents and edged up to 66.58 yen from 66.50 yen.