🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

UPDATE 1-Australian dlr tentative after RBA, NZ dlr edges up

Published 01/09/2015, 03:46 pm
Updated 01/09/2015, 03:47 pm
UPDATE 1-Australian dlr tentative after RBA, NZ dlr edges up
NZD/USD
-
NZD/AUD
-

(Add comments post RBA policy statement)

By Cecile Lefort and Charlotte Greenfield

SYDNEY/WELLINGTON, Sept 1 (Reuters) - The Australian dollar was in limbo on Tuesday after the Reserve Bank of Australia (RBA) offered no fresh guidance on its rate outlook, while the New Zealand dollar edged up on better economic data.

The Australian dollar AUD=D4 was only slightly higher at $0.7122, having skidded 0.8 percent on Monday. It remained close to a 6-1/2 year trough of $0.7044 set last week. Immediate support was found around $0.7100.

As expected, the RBA left the cash rate at a record low of 2.0 percent at its monthly policy meeting, where it has been since May.

The central bank appeared comfortable with the level of the local dollar, reiterating that it is "adjusting to significant declines in key commodity prices."

It also noted a recent spike in global stock market volatility triggered by "developments in China", but offered no insights.

"The main surprise is that despite all the volatility in financial markets over the last few weeks and the heightened worries over China, there is not more reference to that," said Shane Oliver, chief economist at AMP Capital Investors.

Interbank futures eased a touch but were still pricing in a 25-basis point-cut by early next year, largely because of risks of a hard landing in China.

China is the top export market of Australia and New Zealand.

An official survey on the Asian giant's manufacturing sector showed another contraction.

In contrast, the New Zealand dollar NZD=D4 was a clear outperformer, up 0.6 percent on the day to $0.6379. Much of the gains came after data showed an increase in the price of exports in the second quarter, driven by a quarterly rise in dairy prices.

"Momentum certainly suggests further underperformance from NZD. We eye tentative support for NZD/USD at $0.6300, and at $0.8850 in NZD/AUD," said BNZ analysts in a research note.

New Zealand government bonds rose, pushing yields two basis points lower along the yield curve.

Australian government bond futures were also a bit firmer, with the three-year bond contract YTTc1 steady at 98.230. The 10-year contract YTCc1 added 3 ticks to 97.3350.

The diverging rate outlook between the U.S. Federal Reserve and the RBA sent the spread between Australian and U.S. 10-year government bonds to around 44 basis points, the smallest since April. (Editing by Shri Navaratnam)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.