SYDNEY: The Australian and New Zealand dollars were looking to end the week on firm footing on Friday as interest rate differentials provided support, and markets wagered coming US jobs figures would add to the case for policy easing there.
Trade data out of China were too mixed to offer much new direction, with exports topping forecasts with a rise of 7.6%, but imports disappointing with a gain of 1.8%.
One bright spot was that imports of iron ore were up 7% in the five months to May, and the steel-making mineral is Australia’s single biggest export to the Asian giant.
The main theme of the week has been the start of easing cycles abroad with the European Central Bank and Denmark cutting on Thursday, following recent moves by Canada, Switzerland and Sweden.
Futures imply a 63% probability of another ECB cut in September and 36 basis points of easing this year, with a further 63 bps priced in for 2025.
For the Reserve Bank of Australia (RBA), markets have a 50% chance of one cut in the 4.35% cash rate by December and only 46 bps of easing out to the end of 2025.
Investors are slightly more dovish on the Reserve Bank of New Zealand (RBNZ), in part because rates are so much higher there at 5.5%. Futures are full priced for one quarter-point easing by November, and have a total 67 bps of cuts implied by the end of 2025. While Australia’s economic growth has been weak, New Zealand has been in outright technical recession, noted Andrew Ticehurst, an economist at Nomura.
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