Kiwi holds near seven-week low against Australian
The New Zealand dollar edges lower to 77.05 Australian cents from 77.11 cents yesterday.
BUSINESSDESK: The New Zealand dollar held near a seven-week low against its trans-Tasman counterpart as Australia's interest rate advantage widened on the weak local inflation earlier this week and ahead of next week's Reserve Bank meeting.
The kiwi edged lower to 77.05 Australian cents from 77.11 cents yesterday. It was little changed at 80.05 US cents at 5pm in Wellington from 79.99 cents at 8am and up from 79.63 cents yesterday.
The Australian dollar rose to $US1.0388 from $US1.0307 yesterday. Australian interest rates have been increasing their yield advantage over New Zealand rates after tepid second-quarter inflation figures and ahead of next week's central bank meeting.
Traders are betting on an outside chance of a New Zealand rate cut over the coming year, with 14 basis points of reductions to the official cash rate priced in, according to the Overnight Index Swap index.
"These things are keeping a lid on interest rates in New Zealand, whereas in Australia they've got more room to respond to positive offshore events," said Imre Speizer, market strategist at Westpac Bank. "The Aussie has really outperformed the kiwi."
New Zealand's one-year swap rate fell half a basis point to 2.51%, just above the official cash rate of 2.5%.
Mr Speizer said the New Zealand dollar will probably grind higher with more positive investor sentiment, though Europe will continue to loom over any sustained optimism.
The kiwi rose to 65.15 euro cents from 64.08 cents yesterday after a JP Morgan client note said it could beat its record high as the eurozone's debt crisis lingers.
The trade weighted index rose to 72.34 from 72.15 yesterday. The kiwi rose to 51.14 British pence from 50.86 pence yesterday and was little changed at 62.87 yen from 62.91 yen.
Paul McBeth
Thu, 19 Jul 2012
Thu, 19 Jul 2012
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Kiwi holds near seven-week low against Australian
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