Kiwi little changed against AUD after rates kept on hold

The New Zealand dollar was little changed against its transTasman counterpart after the Reserve Bank of Australia kept its benchmark interest rate on hold at 2.75 percent, while saying there is scope for a future cut if need be.

The kiwi was unchanged at 82.81 Australian cents at 5pm in Wellington from immediately before the RBA announcement at 4.30pm and up from 82.70 cents yesterday. It slipped to 80.55 US cents at 5pm from 80.98 cents this morning, up from 79.63 cents yesterday.

The RBA kept its key interest rate unchanged as it attempts to revive a slowing economy which is within view of a peak in its mining boom.

Governor Glenn Stevens said the looser monetary conditions should help growth and that the current inflation outlook "may provide some scope for further easing, should that be required to support demand".

Government figures tomorrow will show Australia's annual economic growth slowed to a pace of 2.7 percent in the first quarter, from an annual pace of 3.1 percent, according to a Reuters survey of economists.

"Interest rates are still pricing in a rate cut before the end of the year, but the chance this week was next to non-existent," says Michael Johnston, a senior trader at HiFX in Auckland. "We expect the kiwi/Aussie to grind higher over time, back up to the 84s, 85s in the coming weeks and months."

The kiwi dropped below 80 US cents for the first time since September after New Zealand markets closed on Friday, before recovering after weak US manufacturing figures. A BusinessDesk survey of eight strategists predicts the local currency may trade in a range of 79.36 US cents to 83 US cents this week, with a positive bias.

The major event risk this week is US employment figures on Friday, with the Federal Reserve linking a lower jobless rate to the prospect of winding down its quantitative easing programme.

The kiwi gained to 80.32 yen from 79.99 yen at 5pm yesterday and advanced to 61.65 euro cents from 61.17 cents. It rose to 52.54 British pence from 52.32 pence yesterday and the trade-weighted index gained to 75.60 from 75.10.

(BusinessDesk)