The New Zealand dollar eased against the Australian dollar after the Reserve Bank of Australia was slightly more upbeat about the economy

The kiwi traded at 92.17 Australian cents at 5pm in Wellington from 92.47 Australian cents at 8:30 am and 92.38 cents late yesterday. It traded at 66.50 US cents versus 61.61 US cents yesterday. 

The RBA kept rates on hold at 1.5 percent as expected as “the board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time,” RBA governor Philip Lowe said in a statement. 

However, it lifted its gross domestic product forecasts slightly and said the unemployment rate would fall further than earlier expected.

“They mildly increased their GDP forecast and dropped down the jobless rate… but it is just a sidestep to being mildly more positive,” said Ross Weston, head of trading for Kiwibank. “It’s really just more of the same.” 

The focus will now shift to the US congressional midterm elections with results due to begin rolling out Wednesday afternoon in New Zealand. While the Republicans are widely expected to keep the Senate, the Democrats look poised to take back control the US House of Representatives, which will make it more challenging for President Donald Trump to push through policy.  

“It all depends on whether Trump retains power and if it doesn’t then that will dilute the US dollar and if the US dollar is weaker, the kiwi will head higher,”  said Weston. “It will be harder for him to get things across the line.” 

The overnight dairy auction, domestic labour data tomorrow, and the statement from the US Federal Open Market Committee early Thursday in New Zealand followed by the Reserve Bank of New Zealand’s monetary policy decision and statement will also garner interest.

The New Zealand dollar traded at 50.94 British pence from 51.26 British pence late yesterday. It was at 4.6014 Chinese yuan from 4.5885 yuan and traded at 75.32 yen from 75.38 yen. It was at 58.28 euro cents from 58.39 cents Monday.

The trade-weighted index was at 72.61 from 72.58.

New Zealand’s two-year swap rate eased 1 basis point to 2.04 percent; the 10-year swaps eased 1 basis point to 2.90 percent.

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