The New Zealand dollar was little changed against the Australian dollar ahead of today's Reserve Bank of Australia decision on interest rates and the release of manufacturing data for China, the largest trading partner for both countries.
The kiwi edged lower to 92.80 Australian cents at 8am in Wellington, from 92.86 cents at 5pm yesterday. The local currency was unchanged at 87.52 US cents.
The New Zealand dollar has appreciated 1.6 percent against its Australian counterpart in the past month, on better prospects for the local economy. Australia's Reserve Bank is expected today to keep its benchmark interest rate unchanged at 2.5 percent while the official and HSBC readings of the China manufacturing PMI are expected to remain above the critical 50 level that demarks expansion from contraction.
"The China data may prove the greater influence on the Australian dollar if the Reserve Bank of Australia toes a familiar line," Bank of New Zealand senior market strategist Kymberly Martin said in a note. Any negative surprise on the China PMI data would boost the New Zealand dollar cross-rate with the Aussie dollar, but was likely to "take its toll" on the cross-rate between the New Zealand and US dollars.
Australia's Reserve Bank will probably maintain its neutral stance but keep alive the debate about whether monetary policy is doing enough to accommodate economic growth, said Martin.
