Dollar drops vs. Australian dollar on more upbeat RBA statement
The kiwi fell to 89.34 Australian cents from 89.82 cents at the start of the day.
The New Zealand dollar fell against the Australian dollar after the Reserve Bank of Australia gave a less gloomy account of the global and domestic economy while keeping its cash rate unchanged at 2 percent.
The kiwi fell to 89.34 Australian cents from 89.82 cents at the start of the day and from 90.06 cents late yesterday. The New Zealand dollar extended its decline against the greenback to 68.05 US cents from 68.76 cents yesterday.
RBA governor Glenn Stevens said there were "reasonable prospects for continued growth in the economy, with inflation close to target" and that the economy was continuing to rebalance following the mining investment boom. Both the kiwi and Australian dollar had weakened overnight as a decline in commodity prices sapped the appeal of currencies linked to iron ore, coal and dairy products.
The RBA "was less dovish than expected," said Alex Hill, head of corporate FX at NZForex. "I wouldn't say it was hawkish and there is still room for lower interest rates but they're not screaming from the rafters that the Australian dollar is too high."
The CRB Index fell 1.3 percent to a month-low 165.7912 overnight and Brent crude futures sank about 0.4 percent to US$37.53 a barrel on speculation producing nations won't do enough in response to a global oversupply of oil that's weighing on prices.
"If you have a night of red prices for commodities, you're going to see the kiwi lower," said Hill.
The Organization of the Petroleum Exporting Countries and other major oil producers are scheduled to meet in Doha, Qatar on April 17 to discuss a plan to rein in supply. However, doubts are growing that agreement will be reached after Saudi Arabia said it will only freeze production if Iran and others follow suit, and Russia reported its highest production in 30 years.
Traders are now awaiting the GlobalDairyTrade auction tonight for direction on New Zealand's largest commodity export, which has also suffered from a global supply/demand imbalance.
The kiwi fell to 59.63 euro cents from 60.40 cents yesterday and declined to 47.63 British pence from 48.33 pence. It fell to 75.18 yen from 76.67 yen and declined to 4.3897 yuan from 4.4540 yuan.
The two-year swap rate rose about 3 basis points to 2.16 percent and 10-year swaps rose 3 basis points to 2.93 percent.
(BusinessDesk)
Jonathan Underhill
Tue, 05 Apr 2016
Tue, 05 Apr 2016
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Dollar drops vs. Australian dollar on more upbeat RBA statement
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