Kiwi dollar gains against the Aussie

The New Zealand dollar is mixed, gaining against the Australian dollar but little changed against the greenback, after downbeat growth and inflation forecasts from the Reserve Bank of Australia.

The kiwi was trading at US67.50c cents at 5pm yesterday from US67.54c at 8.15am and at A95.23c from A95.13c. The tradeweighted index was at 73.23 points from 73.21. The RBA forecasts cap a horror week for the kiwi, which has dropped nearly a cent-and-ahalf from US68.96c a week ago.

After keeping its cash rate on hold earlier this week, the RBA’s latest monetary policy statement yesterday shows it now expects economic growth for Australia of 2.5 per cent for the year ending June, down from its previous forecast of 3.25 per cent.

Similarly, governor Philip Lowe now expects inflation of 1.25 per cent for the same period, down from the bank’s previous 2 per cent expectation.

“That’s been the main thing driving the Aussie dollar lower and that’s in the shadow of governor Lowe’s speech the other day when he switched his tone from saying the next move would be up to it could be down,” says Mitchell McIntyre, a corporate dealer at XE.

Thursday’s “less-than-great” employment numbers are also continuing to hurt the New Zealand dollar — the December quarter unemployment rate came in at 4.3 per cent, above expectations of 4.1 per cent. Making the bad news worse, the participation rate was 70.9 per cent compared with market expectations of 71.1 per cent.

The New Zealand dollar is at 52.12 British pence from 52.09, at 59.52 euro cents from 59.24, at 74.08 yen from 74.15 and at 4.5513 Chinese yuan from 4.5533.