Australia’s dollar traded 0.6 percent from an almost five-year low versus its New Zealand counterpart on bets interest rates at the nations’ central banks will diverge.
Traders see 50 percent odds that the Reserve Bank of Australia will reduce its cash target rate by April next year, interest-rate swaps data compiled by Bloomberg show. They see an 87 percent chance the Reserve Bank of New Zealand will raise borrowing costs in the same period. The Aussie held its first gain in three days against the greenback as investors ponder whether the Federal Reserve will start to taper stimulus that has weighed on the U.S. currency.
“The Aussie-kiwi cross is drifting lower on the expected trajectories of both central banks,” said Alex Sinton, director for institutional foreign exchange in Auckland at Australia & New Zealand Banking Group Ltd. “The NZ$1.12 zone in recent times has presented some difficulty, and we really need some new news to break that.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.