Wellington, AAP – 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 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 on Monday. 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 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 per cent.
Prices of iron ore have tumbled to the lowest in six years, while coal prices remain weak.
‘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 BNZ’s Kymberly Martin.
‘The market now prices almost a 70 per cent chance of an RBA cut next week and a total of 62 basis points of cuts by this time next year.’
Ms Martin said the spread between the two countries’ two-year swap rates is now 160 basis points, the widest since August 2007.
Traders will be watching for the ANZ Business Outlook for an update of confidence among New Zealand companies.
Further ahead this week, the US is scheduled to release manufacturing surveys for March, as well as 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 per cent from 5.5 per cent, UBS economists forecast, while manufacturing probably remained in expansion.
The kiwi fell to 50.63 British pence from 50.73 pence, slipped to 69.26 euro cents from 69.37 cents and traded at 89.98 yen from 89.86 yen.