The New Zealand dollar fell, dragged lower with the Australian dollar on signs consumer sentiment is weakening across the Tasman.
The kiwi was trading at 68.39 US cents at 5pm in Wellington from 68.72 at 7.45am and at 96.93 Australian cents from 96.95. Intra-day, the currency rose as high as 97.11 Australian cents.
“New Zealand above 97 was too attractive for many people,” says Peter Cavanaugh, senior client adviser at Bancorp Treasury Services, but the major factor was the consumer confidence numbers.
The Melbourne Institute and Westpac Bank index of consumer sentiment fell below the neutral 100 points to 98.8, meaning pessimists outnumbered optimists. The index is at its lowest level in more than a year.
Cavanaugh says while Commonwealth Bank of Australia and National Australia Bank economists are predicting the Reserve Bank of Australia will cut interest rates twice this year, ANZ Bank’s economists are now saying there won’t be any rate cuts this year.
Meanwhile, “Brexit fatigue is becoming a documented reason for ignoring” continuing arguments among Britain’s politicians after Prime Minister Theresa May’s latest defeat in parliament.
MPs voted against May’s latest Brexit deal for leaving the European Union by a resounding 391 against to 242 for.
May has since promised to hold two more votes, the first on whether to rule out a no-deal Brexit, or “hard Brexit”. Britain is scheduled to depart the EU on March 29 if no deal is struck.
If MPs vote against hard Brexit the second vote will be on whether Britain should request an extension of the deadline from Brussels in a bid to buy more time to reach a deal.
Cavanaugh says bookmakers have the chances of a hard Brexit option at about 3 percent.
The New Zealand dollar was trading at 52.27 British pence from 52.51, at 60.62 euro cents from 60.79, at 76.93 yen from 76.45 and at 4.5896 Chinese yuan from 4.6084. The trade-weighted index was at 74.29 points from 74.53.
The two-year swap rate ended the day at 1.8157 percent from 1.8368 on Tuesday; the 10-year rate was at 2.3150 percent – an all-time low – from 2.3675 yesterday.