NZ dollar muted after Aussie rate rise

The New Zealand dollar ended a mixed session with a muted reaction to news today that the Reserve Bank of Australia raised its cash rate by 25 basis points to 3.5 per cent.

The NZ dollar had a bumpy ride on Monday night, rising to US72.65c and then plunging to US71.45c by 8am. It consolidated for most of the session here ahead of the Australian rate decision at 4.30pm.

It was US72.03c at 5pm, having risen through the US72c figure on the decision. That left it little changed from the US72.19c at 5pm yesterday.

The decision to raise rates was anticipated, and not surprisingly there was a fairly muted response, IG Markets said in a commentary.

The NZ dollar was A79.80c at 5pm from A79.69c ahead of the decision and A79.84c at 5pm yesterday.

This is the second time the Australian central bank has raised rates, but IG Markets said the language of today's decision suggest the RBA had possibly done enough for the time being.

Earlier, the latest data from the United States showed sharp improvements in manufacturing, construction and housing, encouraging investors to buy riskier assets with higher yields.

Locally, investors are watching the Fonterra internet auction tonight.

The NZ dollar was also down to 0.4874 euro from 0.4890 yesterday, and was little changed at 65.02 yen from 65.05. The trade weighted index was 64.91 at 5pm from 65.07 yesterday.

- NZPA