The New Zealand dollar touched a nine-month high against its Australian counterpart after Australian Reserve Bank governor Glenn Stevens said the Aussie will probably decline further next year and indicated it should be trading closer to 75 US cents.
The kiwi touched 94.90 Australian cents and was trading at 94.39 cents at 8am in Wellington, from 93.74 cents at 5pm yesterday. The local currency slipped to 77.96 US cents from 78.11 cents yesterday as the greenback strengthened after US retail sales rose at the fastest pace in eight months.
In an interview published in the Australian Financial Review this morning, the RBA's Stevens said it was "quite likely" the Aussie would be lower in a year's time and suggested the currency should be trading at closer to 75 US cents, a level not seen since 2009. The Australian dollar dropped overnight, touching 82.13 US cents, its lowest level since June 2010, and was recently trading at 82.54 cents. Still, the AFR said Stevens pushed back against calls for near-term interest rate cuts, saying the economy, jobs and inflation were roughly where the central bank expected them to be.
The Australian dollar "experienced some volatility in the early hours of this morning after an interview with RBA Governor Stevens was published," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. While the Aussie initially "fell sharply" after the comments were published, it "recovered a little as Stevens pushed back against the idea of near-term rate cuts," she said.
In New Zealand today, the BNZ-BusinessNZ Manufacturing PMI report is scheduled for release at 10:30am.
