Business Scoop
Network

NZ dollar gains vs Aussie on tepid wage inflation data

Article – BusinessDesk

NZ dollar gains vs Aussie as tepid wage inflation firms up view for flat rate track By Rebecca HowardNZ dollar gains vs Aussie as tepid wage inflation firms up view for flat rate track

By Rebecca Howard

Aug. 15 (BusinessDesk) – The New Zealand dollar gained against the Aussie as a lack of wage inflation in Australia affirmed expectations for a flat interest rate track across the Tasman.

The kiwi increased to 90.91 Australian cents as at 5pm in Wellington from 90.71 cents yesterday. It traded near a two-and-a-half year low at 65.57 US cents from 65.99 cents yesterday.

New Zealand’s currency outperformed the Aussie as Australian Bureau of Statistics figures showed wages rose a seasonally adjusted 0.6 percent in the second quarter, firming expectations that the Reserve Bank of Australia will keep the target cash rate at 1.5 percent.

ANZ Bank New Zealand senior macro strategist Phil Borkin said the Australian data was “certainly not a signal that the RBA is going to hurry up and tighten” and adds to the view the RBA will remain firmly on hold until 2020.

Concerns over Turkey’s financial crisis also weighed on investor sentiment and capped gains for risk-sensitive currencies such as the kiwi and Aussie dollars. Borkin said in a risk-off market the “Aussie dollar typically does worse than the kiwi as it is viewed as a bit more of a liquid proxy for emerging markets.”

Overall, the kiwi remains very much on the backfoot against the US dollar, “which is just a reflection of ongoing nervousness around the Turkish situation,” Borkin said. While fears eased overnight after finance minister Berat Albayrak pledged to defend the lira, “nothing has really dramatically changed,” Borkin said.

New Zealand’s two-year swap rate was unchanged at 2.02 percent; 10-year swaps slipped 1 basis point to 2.87 percent.

The trade-weighted index decreased to 71.58 from 71.76 yesterday.

The kiwi traded at 57.90 euro cents from 57.87 cents yesterday and at 51.61 British pence from 51.66 British pence.

It fell to 4.5266 Chinese yuan from 4.5407 yuan yesterday, and dropped to 72.45 yen from 73.12 yen yesterday.

(BusinessDesk)

Content Sourced from scoop.co.nz
Original url