The New Zealand dollar fell against the Australian dollar as traders betting the Reserve Bank of Australia would make a strong statement about an over-valued currency were forced to close out their bets when it didn't.
The New Zealand dollar fell to 92.76 Australian cents, from 92.94 Australian cents immediately before the RBA statement and from 92.86 cents the previous day. The kiwi dollar rose to 87.71 US cents from 87.52 cents.
RBA governor Glenn Stevens said in his statement on monetary policy that the Australian dollar "remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy," a change from last month's statement, when he said a weaker currency was assisting in achieving balanced growth in the economy. Helping underpin confidence in both the kiwi and Australian dollars, two gauges of Chinese manufacturing showed expansion in June, with the official purchasing managers' index at 51.
"The market was expecting stronger language around the currency," said Imre Speizer, senior market strategist at Westpac Banking Corp. "People would have shorted (the Australian dollar against the greenback) going into the statement and didn't get the result so they've closed things out."
He said the kiwi dollar probably won't move much ahead of US non-farm payrolls on Thursday, a day earlier than usual because of a public holiday in America. Consensus is that the world's biggest economy added in the low 200,000s.
