Kiwi steady in lead-up to RBA decision, local commodity prices gain

(BusinessDesk) The New Zealand dollar was little changed against its trans-Tasman counterpart in the lead-up to the Reserve Bank of Australia's monetary policy review, with markets undecided on whether the central bank will cut rates.

The kiwi traded at 79.85 Australian cents at 5pm in Wellington from 79.79 cents at 8.30am, down from 80 cents yesterday. It traded at 82.80 US cents from 82.71 cents yesterday.

Traders are giving the RBA a 66% chance of a quarter-point rate cut to the 3.5% target cash rate, when governor Glenn Stevens announces the bank's decision later today.

Thel bank has had to contend with a slowing resources sector, which has been making up for weakness in other parts of the economy in the past year. The kiwi climbed 2.8% against its Australian counterpart since the start of September.

"The kiwi/Aussie cross is pretty sensitive to the RBA decision," says Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "The cross-rate has come a long way, and if the RBA cuts that movement would be justified."

The price of New Zealand raw materials rose 3.5% in September, in the second monthly gain and biggest in a year-and-a-half, according to the ANZ Commodity Price Index.

That comes ahead of the latest dairy auction on Fonterra's GlobalDairyTrade platform, which has shown increasing prices as US supply is held down by drought in the world's biggest economy.

Today's RBA meeting is the first of several this week, with the Bank of Japan, Bank of England and European Central Bank set to review monetary policies. The minutes from last month's Federal Open Market Committee meeting are also scheduled for release.

The main piece of data investors are waiting for this week is US non-farm payrolls on Friday, which is expected to show slow employment growth in the world's biggest economy. The Federal Reserve has ramped up its focus on employment as it seeks to revive the nation's economic growth.

The kiwi was little changed at 51.29 British pence and fell to 64.18 euro cents from 64.48 cents yesterday. It gained to 64.64 yen from 64.37 yen yesterday, and the trade-weighted index was little changed at 73.72 from 73.75.