The Australian dollar marked time against the US dollar on Tuesday after minutes of the Reserve Bank of Australia's June meeting left the near term outlook for steady rates unchanged. This was in contrast to New Zealand's central bank, which last week surprised some by cutting interest rates and leaving the door open to more easing, keeping the Aussie near a seven-month peak against its kiwi peer.
The Aussie edged up 0.2 percent to NZ$1.1095, nearing Monday's top of NZ$1.1114. Investors shrugged off the RBA's repeated plea for a weaker currency. In the minutes, the central bank said a further drop in the Aussie is "both likely and necessary", particularly given the significant falls in commodity prices over the past year. The Aussie held its ground against the greenback at $0.7760, having briefly climbed to $0.7781 earlier.
It's kiwi peer slipped below $0.7000, staying on the back foot since the rate cut drove it to a five-year low of $0.6943. Analysts saw risks that it cold fall further. "A minor base is forming at $0.6940 but it should eventually give way. Dairy prices tonight are a potential catalyst," said Westpac senior strategist Imre Speizer. In the near term, the kiwi is seen trading in a range of $0.6940/50 to $0.7020/30.
New Zealand will release first quarter gross domestic product data on Thursday, while a Federal Reserve meeting and Greece's debt crisis added to investor wariness. New Zealand government bonds yields moved a tick lower. Australian government bond futures were subdued with the three-year contract 1.5 ticks higher at 97.930. The 10-year contract was unchanged at 96.9500.
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