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Business Recorder
22-07-2025
- Business
- Business Recorder
Australia, NZ dollars hit pause as rate outlook pondered
SYDNEY: The Australian and New Zealand dollars were flat on Tuesday as concerns about U.S. tariffs and central bank independence hamstrung the greenback, offsetting a dovish outlook for interest rates at home. Minutes of the Reserve Bank of Australia July board meeting confirmed further cuts lay ahead and a decision to pause at 3.85% was largely because the majority did not want to be seen as easing too quickly. One of the arguments against an immediate cut was that the labour market had not loosened as forecast, but data since then has shown unemployment unexpectedly spiked to a 3-1/2 year high in June. As a result, markets imply almost a 100% chance the RBA will ease to 3.60% at its next meeting on August 12, and take rates to 3.10% by the end of the year. 'We expect another three 25 bps rate cuts this cycle – in August, November and February - down to a 3.1% terminal rate,' said Andrew Boak, an economist at Goldman Sachs. 'We view the risks as skewed to a faster and deeper easing cycle, and particularly if June's gap higher in the unemployment rate is sustained.' A speech by RBA Governor Michele Bullock due on Thursday should help refine the outlook and she is likely to draw questions on whether the central bank is being too slow to ease given the disappointing labour data. Three-year bond futures were supported near a two-week high of 96.635, while 10-year yields dipped 2 basis points to 4.308%. The Aussie held steady at $0.6520, some way above last week's low of $0.6455. Resistance lies around $0.6540 and $0.6595. The kiwi dollar eased a fraction to $0.5960, still weighed by a downside surprise on quarterly inflation. Major support lies at $0.5907 with resistance at $0.5990. Markets now imply around an 80% probability the Reserve Bank of New Zealand will cut the 3.25% cash rate a quarter point at its meeting on August 20. Investors suspect this will be close to the end of the easing cycle, with some chance of a move to 2.75% next year. The RBNZ's chief economist is due to give a speech on the economic impact of tariffs on Thursday and might help refine the prospects of an August easing.
Mint
22-07-2025
- Business
- Mint
Australia, NZ dollars hit pause as rate outlook pondered
SYDNEY, July 22 (Reuters) - The Australian and New Zealand dollars were flat on Tuesday as concerns about U.S. tariffs and central bank independence hamstrung the greenback, offsetting a dovish outlook for interest rates at home. Minutes of the Reserve Bank of Australia July board meeting confirmed further cuts lay ahead and a decision to pause at 3.85% was largely because the majority did not want to be seen as easing too quickly. One of the arguments against an immediate cut was that the labour market had not loosened as forecast, but data since then has shown unemployment unexpectedly spiked to a 3-1/2 year high in June. As a result, markets imply almost a 100% chance the RBA will ease to 3.60% at its next meeting on August 12, and take rates to 3.10% by the end of the year. "We expect another three 25 bps rate cuts this cycle - in August, November and February - down to a 3.1% terminal rate," said Andrew Boak, an economist at Goldman Sachs. "We view the risks as skewed to a faster and deeper easing cycle, and particularly if June's gap higher in the unemployment rate is sustained." A speech by RBA Governor Michele Bullock due on Thursday should help refine the outlook and she is likely to draw questions on whether the central bank is being too slow to ease given the disappointing labour data. Three-year bond futures were supported near a two-week high of 96.635, while 10-year yields dipped 2 basis points to 4.308%. The Aussie held steady at $0.6520, some way above last week's low of $0.6455. Resistance lies around $0.6540 and $0.6595. The kiwi dollar eased a fraction to $0.5960, still weighed by a downside surprise on quarterly inflation. Major support lies at $0.5907 with resistance at $0.5990. Markets now imply around an 80% probability the Reserve Bank of New Zealand will cut the 3.25% cash rate a quarter point at its meeting on August 20. Investors suspect this will be close to the end of the easing cycle, with some chance of a move to 2.75% next year. The RBNZ's chief economist is due to give a speech on the economic impact of tariffs on Thursday and might help refine the prospects of an August easing. (Reporting by Wayne Cole; Editing by Kate Mayberry)
Business Recorder
20-06-2025
- Business
- Business Recorder
Australia, NZ dollars steady after setback, geopolitics a drag
SYDNEY: The Australian and New Zealand dollars found some footing on Friday as the Israel-Iran conflict continued but did not escalate to US involvement, offering a welcome reprieve to risk assets. Markets were left in geopolitical limbo after President Donald Trump put off a decision on whether to strike Iran for two weeks, while the two sides traded more missile attacks. Still, the lack of an immediate US attack was enough for the Aussie to edge up 0.1% to $0.6487, having dived as deep as $0.6446 overnight. Support lies at $0.6408 with resistance at the recent seven-month high of $0.6552. The kiwi dollar was hanging on at $0.6000, having slid as far as $0.5959 on Thursday as a break of support sparked stop-loss selling. That was well off the eight-month top of $0.6088 hit early in the week and risked a retreat to $0.5926. A mixed Australian jobs report had little impact on market expectations for a quarter-point rate cut from the Reserve Bank of Australia (RBA) in July, which is priced at a 75% chance. 'We remain comfortable with our view that the RBA's next rate cut is most likely to occur in August,' Westpac analysts said in a note. 'The RBA have made it clear they want to adjust policy in a cautious and predictable manner, warranting another quarterly reading on inflation and time to assess global conditions.' Inflation figures for the second quarter are not due until late July. Across the Tasman, economic growth rebounded a little faster than expected in the first quarter, but business investment was disappointingly weak. Markets still see scant chance of the Reserve Bank of New Zealand cutting its 3.25% rate in July, though the probability of an August move is above 60%. Australia, NZ dollars take collateral damage from Mideast conflict 'We now expect the RBNZ to pause the easing cycle at July's meeting, instead of cutting,' said Andrew Boak, an economist at Goldman Sachs. However, given the large amount of slack in the labour market, Boak saw more scope on the downside for rates and forecast three more quarter-point easings to 2.5%, well below the market's 3.0% floor.
Mint
20-06-2025
- Business
- Mint
Australia, NZ dollars steady after setback, geopolitics a drag
SYDNEY, June 20 (Reuters) - The Australian and New Zealand dollars found some footing on Friday as the Israel-Iran conflict continued but did not escalate to U.S. involvement, offering a welcome reprieve to risk assets. Markets were left in geopolitical limbo after President Donald Trump put off a decision on whether to strike Iran for two weeks, while the two sides traded more missile attacks. Still, the lack of an immediate U.S. attack was enough for the Aussie to edge up 0.1% to $0.6487, having dived as deep as $0.6446 overnight. Support lies at $0.6408 with resistance at the recent seven-month high of $0.6552. The kiwi dollar was hanging on at $0.6000, having slid as far as $0.5959 on Thursday as a break of support sparked stop-loss selling. That was well off the eight-month top of $0.6088 hit early in the week and risked a retreat to $0.5926. A mixed Australian jobs report had little impact on market expectations for a quarter-point rate cut from the Reserve Bank of Australia (RBA) in July, which is priced at a 75% chance. "We remain comfortable with our view that the RBA's next rate cut is most likely to occur in August," Westpac analysts said in a note. "The RBA have made it clear they want to adjust policy in a cautious and predictable manner, warranting another quarterly reading on inflation and time to assess global conditions." Inflation figures for the second quarter are not due until late July. Across the Tasman, economic growth rebounded a little faster than expected in the first quarter, but business investment was disappointingly weak. Markets still see scant chance of the Reserve Bank of New Zealand cutting its 3.25% rate in July, though the probability of an August move is above 60%. "We now expect the RBNZ to pause the easing cycle at July's meeting, instead of cutting," said Andrew Boak, an economist at Goldman Sachs. However, given the large amount of slack in the labour market, Boak saw more scope on the downside for rates and forecast three more quarter-point easings to 2.5%, well below the market's 3.0% floor. (Reporting by Wayne Cole; Editing by Jamie Freed)
Business Recorder
19-06-2025
- Business
- Business Recorder
Australia, NZ dollars take collateral damage from Mideast conflict
SYDNEY: The Australian and New Zealand dollars slid on Thursday as concerns the United States was inching closer to striking Iran dampened risk sentiment, while domestic data was too mixed to offer much direction. The Aussie, often used as a proxy for risk assets, lost 0.4% to $0.6482, reversing its overnight bounce from $0.6470. Resistance lies at the recent seven-month top of $0.6552, with major support at $0.6456 and $0.6408. The kiwi dollar eased 0.7% to $0.5988, breaking support at $0.5996 and threatening a retreat to $0.5944. In Australia, data showed employment fell by 2,500 in May, when analysts had looked for a rise of 22,500. Australia, New Zealand dollars attempt to steady after sell-off, Fed decision looms The details were stronger with the jobless rate steady at 4.1%, while full-time jobs and hours worked both jumped. Markets slightly trimmed the chance of a July rate cut from the Reserve Bank of Australia to 64%, from 70% before the data. A quarter-point reduction in the 3.85% cash rate is still fully priced for August and rates are seen bottoming between 2.85% and 3.10% by early next year. 'In our view, the labour market is no longer 'tight' and isn't contributing to wage pressures or inflation,' said Andrew Boak, an economist at Goldman Sachs. 'We continue to expect the RBA to cut 25bp at its next meeting in July, followed by cuts in August and November to a terminal rate of 3.1%.' In New Zealand, figures showed the economy grew 0.8% in the first quarter, just pipping forecasts of 0.7%, thanks mainly to a rebound in consumer spending after a couple of tough years. That was twice the 0.4% gain projected by the Reserve Bank of New Zealand and reinforced the case against a rate cut in July, which is priced at just 17%. 'With the economy regaining its footing sooner than expected after last year's sharp downturn, we continue to expect that the RBNZ will take the opportunity to pause and assess the situation at its July review,' said Michael Gordon, a senior economist at Westpac. The market implies around a 60% chance of a quarter-point cut to 3.0% in August and is fully priced by November, though that is seen as the end of the cycle.
