Kiwi dollar eases against Oz after political drama

The New Zealand dollar is heading for a 0.7 per cent gain against the Australian dollar, losing some momentum after Scott Morrison won the caucus vote to be Prime Minister.

The kiwi traded at A91.20c at 5pm yesterday versus A91.53c at 8am and A91.43c on Thursday. It traded at A90.61c last Friday in New York. It fell to US66.41c from US66.68c on Thursday and largely unchanged from US66.36c last Friday.

The Australian dollar fell sharply on political turmoil across the Tasman resulting in Prime Minister Malcolm Turnbull’s resignation yesterday. However, it recovered some of those losses when Morrison beat former Home Affairs Minister Peter Dutton and Foreign Minister Julie Bishop to take the nation’s top job.

“PM Morrison is the most market-friendly option, having successfully negotiated through multiple portfolios such as social security, border security, and more recently presiding over a substantial improvement in the budget balance as Treasurer,” said Annette Beacher, chief Asia-Pac macro strategist for TD Securities.

“This was a bit of a relief rally ... markets are viewing Morrison as a bit of the status quo outcome,” said ANZ Bank New Zealand senior macro strategist Phil Borkin.

Investors will now focus on Federal Reserve chair Jerome Powell who will give a speech at the Federal Reserve Bank of Kansas City Economic Policy Symposium, Wyoming. The trade-weighted index declined to 72.08 from 72.26. The kiwi traded at

74.01 yen from 73.89 yen on Thursday and fell to 57.43 euro cents from 57.70 cents. It was little changed at 51.79 British pence from

51.80 pence and fell to 4.5749 Chinese yuan from 4.5816 yuan. New Zealand’s two-year swap rate rose 1 basis point to 2.02 per cent and 10-year swaps rose 1 basis point to 2.85 per cent.