Kiwi up against Aussie ahead of election day

The New Zealand dollar rose against its transtasman counterpart as the market awaits the outcome of today’s Australian federal election and as trade tensions between China and the US remain top of mind among traders.

The domestic currency was trading at A94.93c at 5.05pm yesterday from A94.79c at 8am.

Another niggle is concern about the sabre-rattling in the US against Iran, including the news National Security Adviser John Bolton had ordered the Pentagon to present options to send as many as 120,000 troops to the Middle East. President Donald Trump has said he doesn’t want a war with Iran.

The kiwi was trading at US65.38c from US65.37c, down more half a cent from where it finished at US65.9c in New York a week ago. The trade-weighted index was at 72.14 points from 72.04.

In the Australian election, the polls are indicating the Government will change from a Liberal Party-led coalition with Scott Morrison as Prime Minister to a Labor Government led by Bill Shorten.

“The Australian dollar probably won’t react if Labor wins,” says Derek Rankin at Rankin Treasury Services. “It will probably strengthen if the Liberals manage to hold on.”

Regardless of the outcome, both the Australian and New Zealand currencies are under pressure and the market is pricing in a likely rate cut by the Reserve Bank of Australia in June, Rankin says.

The kiwi was trading at 51.09 British pence from 51.08, 58.47 euro cents from

58.46, 71.70 yen from 71.77 and 4.5113 Chinese yuan from 4.5982. The New Zealand twoyear swap rate fell to 1.5352 per cent, the

10-year swap rate rose to 2.0650 per cent.