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Business Recorder
5 days ago
- Business
- Business Recorder
Australia, NZ dollars find support in US rate cut wagers
SYDNEY: The Australian and New Zealand dollars consolidated quietly on Wednesday as mounting expectations of a US rate cut undermined the greenback and offset looser policy at home. The Aussie was down a fraction at $0.6519, having bounced from a low of $0.6483 overnight. Resistance lies at $0.6541 ahead of the recent top of $0.6625, with support at $0.6450 and $0.6419. The kiwi dollar stood at $0.5947, after rallying from a trough of $0.5914 overnight. It now faces resistance around $0.5971. Risk sentiment received a boost as US inflation proved no higher than expected and helped the Aussie weather a cut in interest rates from the Reserve Bank of Australia, as well as a dovish policy outlook. Data showing wage growth holding steady at a moderate 3.4% in the second quarter was not seen as an obstacle to easing, while promising some support to consumer spending. Markets imply around a 35% chance the RBA will trim the 3.60% cash rate at its next meeting in September, and are fully priced for a move in November. 'The RBA's communications reflect a clear easing bias,' said Andrew Boak, an economist at Goldman Sachs. 'We view the balance of risks to our forecast rate cuts in November/February as skewed to the downside – with back-to-back cuts likely in September should the next couple of labour market reports disappoint.' The July jobs report is due on Thursday and analysts look for employment to bounce back by 25,000 after a surprisingly subdued 2,000 gain in June. The unemployment rate is expected to hold at 4.3% after a jump in June, but any further increase would narrow the odds for a rate reduction in September. The Reserve Bank of New Zealand holds its next meeting on August 20 and markets imply a 90% probability it will cut the 3.25% cash rate by a quarter point, bringing its easing cycle to a whopping 250 basis points. Investors look for perhaps one further cut to come late this year or early next, followed by a protracted period at 2.75%. That outlook has seen two-year swap rates rally steadily to reach 3.00%, a whisker from a May low of 2.985%. A break under there would take it to levels not seen since early 2022. Yields on 10-year bonds hit four-month lows at 4.418%, narrowing the spread over Treasuries to a slim 13 basis points. Reuters
Business Recorder
22-07-2025
- Business
- Business Recorder
Australia, NZ dollars hit pause as rate outlook pondered
SYDNEY: The Australian and New Zealand dollars were flat on Tuesday as concerns about U.S. tariffs and central bank independence hamstrung the greenback, offsetting a dovish outlook for interest rates at home. Minutes of the Reserve Bank of Australia July board meeting confirmed further cuts lay ahead and a decision to pause at 3.85% was largely because the majority did not want to be seen as easing too quickly. One of the arguments against an immediate cut was that the labour market had not loosened as forecast, but data since then has shown unemployment unexpectedly spiked to a 3-1/2 year high in June. As a result, markets imply almost a 100% chance the RBA will ease to 3.60% at its next meeting on August 12, and take rates to 3.10% by the end of the year. 'We expect another three 25 bps rate cuts this cycle – in August, November and February - down to a 3.1% terminal rate,' said Andrew Boak, an economist at Goldman Sachs. 'We view the risks as skewed to a faster and deeper easing cycle, and particularly if June's gap higher in the unemployment rate is sustained.' A speech by RBA Governor Michele Bullock due on Thursday should help refine the outlook and she is likely to draw questions on whether the central bank is being too slow to ease given the disappointing labour data. Three-year bond futures were supported near a two-week high of 96.635, while 10-year yields dipped 2 basis points to 4.308%. The Aussie held steady at $0.6520, some way above last week's low of $0.6455. Resistance lies around $0.6540 and $0.6595. The kiwi dollar eased a fraction to $0.5960, still weighed by a downside surprise on quarterly inflation. Major support lies at $0.5907 with resistance at $0.5990. Markets now imply around an 80% probability the Reserve Bank of New Zealand will cut the 3.25% cash rate a quarter point at its meeting on August 20. Investors suspect this will be close to the end of the easing cycle, with some chance of a move to 2.75% next year. The RBNZ's chief economist is due to give a speech on the economic impact of tariffs on Thursday and might help refine the prospects of an August easing.
Mint
22-07-2025
- Business
- Mint
Australia, NZ dollars hit pause as rate outlook pondered
SYDNEY, July 22 (Reuters) - The Australian and New Zealand dollars were flat on Tuesday as concerns about U.S. tariffs and central bank independence hamstrung the greenback, offsetting a dovish outlook for interest rates at home. Minutes of the Reserve Bank of Australia July board meeting confirmed further cuts lay ahead and a decision to pause at 3.85% was largely because the majority did not want to be seen as easing too quickly. One of the arguments against an immediate cut was that the labour market had not loosened as forecast, but data since then has shown unemployment unexpectedly spiked to a 3-1/2 year high in June. As a result, markets imply almost a 100% chance the RBA will ease to 3.60% at its next meeting on August 12, and take rates to 3.10% by the end of the year. "We expect another three 25 bps rate cuts this cycle - in August, November and February - down to a 3.1% terminal rate," said Andrew Boak, an economist at Goldman Sachs. "We view the risks as skewed to a faster and deeper easing cycle, and particularly if June's gap higher in the unemployment rate is sustained." A speech by RBA Governor Michele Bullock due on Thursday should help refine the outlook and she is likely to draw questions on whether the central bank is being too slow to ease given the disappointing labour data. Three-year bond futures were supported near a two-week high of 96.635, while 10-year yields dipped 2 basis points to 4.308%. The Aussie held steady at $0.6520, some way above last week's low of $0.6455. Resistance lies around $0.6540 and $0.6595. The kiwi dollar eased a fraction to $0.5960, still weighed by a downside surprise on quarterly inflation. Major support lies at $0.5907 with resistance at $0.5990. Markets now imply around an 80% probability the Reserve Bank of New Zealand will cut the 3.25% cash rate a quarter point at its meeting on August 20. Investors suspect this will be close to the end of the easing cycle, with some chance of a move to 2.75% next year. The RBNZ's chief economist is due to give a speech on the economic impact of tariffs on Thursday and might help refine the prospects of an August easing. (Reporting by Wayne Cole; Editing by Kate Mayberry)
Business Recorder
20-06-2025
- Business
- Business Recorder
Australia, NZ dollars steady after setback, geopolitics a drag
SYDNEY: The Australian and New Zealand dollars found some footing on Friday as the Israel-Iran conflict continued but did not escalate to US involvement, offering a welcome reprieve to risk assets. Markets were left in geopolitical limbo after President Donald Trump put off a decision on whether to strike Iran for two weeks, while the two sides traded more missile attacks. Still, the lack of an immediate US attack was enough for the Aussie to edge up 0.1% to $0.6487, having dived as deep as $0.6446 overnight. Support lies at $0.6408 with resistance at the recent seven-month high of $0.6552. The kiwi dollar was hanging on at $0.6000, having slid as far as $0.5959 on Thursday as a break of support sparked stop-loss selling. That was well off the eight-month top of $0.6088 hit early in the week and risked a retreat to $0.5926. A mixed Australian jobs report had little impact on market expectations for a quarter-point rate cut from the Reserve Bank of Australia (RBA) in July, which is priced at a 75% chance. 'We remain comfortable with our view that the RBA's next rate cut is most likely to occur in August,' Westpac analysts said in a note. 'The RBA have made it clear they want to adjust policy in a cautious and predictable manner, warranting another quarterly reading on inflation and time to assess global conditions.' Inflation figures for the second quarter are not due until late July. Across the Tasman, economic growth rebounded a little faster than expected in the first quarter, but business investment was disappointingly weak. Markets still see scant chance of the Reserve Bank of New Zealand cutting its 3.25% rate in July, though the probability of an August move is above 60%. Australia, NZ dollars take collateral damage from Mideast conflict 'We now expect the RBNZ to pause the easing cycle at July's meeting, instead of cutting,' said Andrew Boak, an economist at Goldman Sachs. However, given the large amount of slack in the labour market, Boak saw more scope on the downside for rates and forecast three more quarter-point easings to 2.5%, well below the market's 3.0% floor.
Mint
20-06-2025
- Business
- Mint
Australia, NZ dollars steady after setback, geopolitics a drag
SYDNEY, June 20 (Reuters) - The Australian and New Zealand dollars found some footing on Friday as the Israel-Iran conflict continued but did not escalate to U.S. involvement, offering a welcome reprieve to risk assets. Markets were left in geopolitical limbo after President Donald Trump put off a decision on whether to strike Iran for two weeks, while the two sides traded more missile attacks. Still, the lack of an immediate U.S. attack was enough for the Aussie to edge up 0.1% to $0.6487, having dived as deep as $0.6446 overnight. Support lies at $0.6408 with resistance at the recent seven-month high of $0.6552. The kiwi dollar was hanging on at $0.6000, having slid as far as $0.5959 on Thursday as a break of support sparked stop-loss selling. That was well off the eight-month top of $0.6088 hit early in the week and risked a retreat to $0.5926. A mixed Australian jobs report had little impact on market expectations for a quarter-point rate cut from the Reserve Bank of Australia (RBA) in July, which is priced at a 75% chance. "We remain comfortable with our view that the RBA's next rate cut is most likely to occur in August," Westpac analysts said in a note. "The RBA have made it clear they want to adjust policy in a cautious and predictable manner, warranting another quarterly reading on inflation and time to assess global conditions." Inflation figures for the second quarter are not due until late July. Across the Tasman, economic growth rebounded a little faster than expected in the first quarter, but business investment was disappointingly weak. Markets still see scant chance of the Reserve Bank of New Zealand cutting its 3.25% rate in July, though the probability of an August move is above 60%. "We now expect the RBNZ to pause the easing cycle at July's meeting, instead of cutting," said Andrew Boak, an economist at Goldman Sachs. However, given the large amount of slack in the labour market, Boak saw more scope on the downside for rates and forecast three more quarter-point easings to 2.5%, well below the market's 3.0% floor. (Reporting by Wayne Cole; Editing by Jamie Freed)
