The Australian Dollar has weakened against all of its most traded currency’s, wiping out the gains it made in early trading. The New Zealand Dollar however made gains at the expense of its Australian neighbour.
The Central Bank signalled that it is prepared to cut interest rates to a record low later this year. It chose to not change the current rate of 3%.
“The inflation outlook would afford scope to ease policy further, should that be necessary to support demand,” the Bank said in a statement after it announced its policy decision. Australia’s bonds rallied and New Zealand’s dollar fell as declines in global stocks demand boosted demand for haven assets.
RBA governor Glenn Stevens said; “Substantial easing” through last year meant the board didn’t need to cut further. Still, the central bank will “assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time.”
New Zealand has now swapped places with Australia as the stronger performing economy due to Australia’s mining boom coming to an end and the improving demand for the higher yielding ‘Kiwi’. The smaller nation’s recovery is being boosted by the rebuilding of the Canterbury region that was devastated by an earthquake in 2011.
Investors have largely ignored New Zealand employment data, showing a 0.5% increase in wage costs in the December quarter. That comes ahead of the household labour force survey on Thursday, which is expected to show a headline unemployment rate of 7%.
It is forecast that the New Zealand currency could hit at least 82.60 Australian cents over the course of the year.
These exchange rates were correct as of 09:55 am
The Australian Dollar to Euro exchange rate is currently trading at 0.76864
The Australian Dollar to Pound exchange rate is currently trading at 0.65865
The Australian Dollar to US Dollar exchange rate is currently trading at 1.04074
The Australian Dollar to New Zealand Dollar exchange rate is currently trading at 1.2318
The Pound to Australian Dollar exchange rate is currently trading at 1.5182
The Euro to Australian Dollar exchange rate is currently trading at 1.3010
The US Dollar to Australian Dollar exchange rate is currently trading at 0.9608
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