Story image

NZ dollar charts record high vs Aussie dollar on RBA rate cut talk, weak iron ore

01 Apr 15

The New Zealand dollar rose to a record against the Australian dollar on speculation the Reserve Bank of Australia will cut interest rates again as soon as next week, while the price of iron ore, a key export, continues to slide.

The kiwi dollar rose as high as 98.43 Australian cents, and was recently at 98.01 cents, up from 97.53 cents late yesterday. The local currency fell to 74.93 US cents from 75.39 cents. The trade-weighted index fell to 78.75 from 78.95.

Australian media reports from RBA watchers cite the prospect of a rate cut after the central bank's April 7 board meeting, potentially pushing the cash rate down a quarter point to a new record low 2 percent. Prices of iron ore have tumbled to the lowest in six years, while coal prices remain weak, weighing on Australia's resources sector and suggesting "there is plenty of pressure for the RBA to press forward with another rate cut, Rabobank currency strategist Jane Foley was reported as saying.

"As the market has moved to factor in greater prospect of an RBA rate cut next week, the NZD/AUD cross has pushed up to new highs," said Kymberly Martin, a strategist at Bank of New Zealand. "The market now prices almost a 70 percent chance of an RBA cut next week and a total of 62 basis points of cuts by this time next year."

Martin said in the of face of divergence in the policy position of central banks in Australia and New Zealand, and the move in the cross rate, the spread between the two countries' two-year swap rates has widened out to 160 basis points, the widest since August 2007.

Traders will be watching today for the ANZ Business Outlook for an update of confidence among New Zealand companies.

Further ahead this week, the US is scheduled to release its PMI and ISM manufacturing surveys for March, as well as ADP private payrolls figures, which are a precursor to the official payrolls data on Friday. The world's biggest economy probably stacked on 260,000 jobs this month, while the jobless rate fell to 5.4 percent from 5.5 percent, UBS economists forecast, while manufacturing probably remained in expansion.

Last week Fonterra Cooperative Group said it would add 12,140 tonnes of powder to the GlobalDairyTrade auction over the next 12 months, with 90 percent of the increased volume added in the coming three months. Most of the increase was in whole milk powder, with an additional 6,230 tonnes added over the next three months, it said. Whole milk powder futures dropped on the NZX following the announcement. The GDT auction results will be released in the early hours of Thursday morning, NZ time.

The kiwi fell to 50.63 British pence from 50.73 pence yesterday and slipped to 69.26 euro cents from 69.37 cents. It traded at 89.98 yen from 89.86 yen.

How blockchain will impact NZ’s economy
Distributed ledgers and blockchain are anticipated to provide a positive uplift to New Zealand’s economy.
25% of malicious emails still make it through to recipients
Popular email security programmes may fail to detect as much as 25% of all emails with malicious or dangerous attachments, a study from Mimecast says.
Human value must be put back in marketing - report
“Digital is now so widely adopted that its novelty has worn off. In their attempt to declutter, people are being more selective about which products and services they incorporate into their daily lives."
Wine firm uses AR to tell its story right on the bottle
A Central Otago wine company is using augmented reality (AR) and a ‘digital first’ strategy to change the way it builds its brand and engages with customers.
DigiCert conquers Google's distrust of Symantec certs
“This could have been an extremely disruptive event to online commerce," comments DigiCert CEO John Merrill. 
Protecting organisations against internal fraud
Most companies tend to take a basic approach that focuses on numbers and compliance, without much room for grey areas or negotiation.
Telesmart to deliver Cloud Calling for Microsoft Teams
The integration will allow Telesmart’s Cloud Calling for Microsoft Teams to natively enable external voice connectivity from within Teams collaborative workflow environment.
Jade Software & Ambit take chatbots to next level of AI
“Conversation Agents present a huge opportunity to increase customer and employee engagement in a cost-effective manner."