Dec. 3 (BusinessDesk) - The New Zealand dollar was little changed against the Australian dollar amid expectations the Reserve Bank of Australia will cut its benchmark interest rate this week while New Zealand’s central bank will keep rates unchanged, narrowing the premium offered across the Tasman.
The New Zealand dollar traded at 78.59 Australian cents from 78.65 cents in New York on Friday. The kiwi traded at 82.04 US cents from 81.98 cents on Friday.
The Reserve Bank of Australia will cut its cash rate a quarter point to 3 percent tomorrow, ahead of economic growth figures for the third quarter on Wednesday expected to show the economy held to its 0.6 percent expansion. The Reserve Bank of New Zealand releases its monetary policy statement on Thursday, the first under new governor Graeme Wheeler, who will keep rates unchanged even in the face of weaker third-quarter data, economists predict.
“A sluggish local economy certainly gives the bank reason to sound more dovish relative to September,” said Mike Jones, strategist at Bank of New Zealand.
Helping support both the Australian and New Zealand dollars, China’s official PMI was released over the weekend, with a stronger-than-expected reading of 50.8, showing manufacturing in the biggest and second-biggest market for Australian and New Zealand is picking up pace.
The kiwi dollar rose to 67.66 yen from 67.58 yen while the trade-weighted index rose to 73.45 from 73.39. The New Zealand dollar rose to 63.22 euro cents from 63.10 cents and traded at 51.24 British pence from 51.21 pence.