The kiwi was trading at 95.86 Australian cents at 5pm. Photo / 123RF
The New Zealand dollar gained against the Aussie after Westpac Banking Corp's chief economist said he now expects Australia's central bank to cut rates twice more.
The kiwi was trading at 95.86 Australian cents at 5pm in Wellington versus 95.70 cents at 8am. It was at 66.95 US cents versus 67.02 cents, and the trade-weighted index eased to 73.39 points from 73.42.
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Australia's central bank will lower interest rates twice more and could adopt a package with the second easing to allow lenders to pass on the reduction in full, Westpac chief economist Bill Evans said, according to Bloomberg.
Imre Speizer, senior market strategist at Westpac New Zealand, said Evans now expects the RBA to cut by 25 basis points in October, or possibly September, and follow that up with another 25-point cut in early 2020. He had previously forecast one rate cut in November to 0.75 per cent.
"That will take the rate to 0.5 per cent and our chief economist then spoke of the merits of accompanying that second rate cut with quantitative easing," said Speizer.
Speizer said the kiwi will likely remain under pressure against the greenback, given the US dollar is benefiting as markets back away from the idea of a steep rate cut by the US Federal Reserve early next week. The Fed, however, is still expected to cut rates by 25 basis points but "probably won't be as dovish as the market was expecting."
"On the kiwi side, we have the reserve bank (meeting) in a couple of weeks and they will cut and we are in a soft patch in the economy so there hasn't really been any good news to cheer up the kiwi," he said. "I think it will pull back a couple of cents at least" in the medium term, he said.
The kiwi was at 53.82 British pence from 53.90, at 60.05 euro cents from 60.11, at 72.38 yen from 72.56 and at 4.6062 Chinese yuan from 4.6108.
The New Zealand two-year swap rate was at 1.2927 per cent from 1.3000 yesterday while the 10-year swap rate was at 1.7275 per cent from 1.7225.
The New Zealand sharemarket reached its highest level in a month.