The NZD/USD opens the day a touch higher after trading sideways for most of yesterday, however the NZD/AUD is currently trading at its lowest level in 6 months. The Aussie Dollar finally found some upward momentum after the RBA was slightly more upbeat on the economy than expected. Also a stronger Chinese Yuan gave the AUD a boost as trade tensions temporarily eased and risk appetite improved. The Kiwi Dollar perhaps surprisingly was not able to hitch a ride with the Aussie and has remained fairly flat. Last nights Global Dairy Auction was something of a non-event with the overall price index unchanged from last month. On the positive side, prices in NZ Dollars are up 0.8% due to the weaker currency.
The RBA kept the OCR unchanged at 1.5% as expected. Rates have now been unchanged since August 2016. The AUD found some support as the accompanying statement from the RBA painted a slightly more upbeat outlook for the Australian economy. RBA Governor Lowe said that global economic growth and unemployment rates are on a good track and that global inflation is expected to increase as a result of tight labour markets. He expected average growth in Australian GDP to reach around 3% in 2018 and 2019, while the unemployment rate would gradually decline to around 5% in the coming years. The bank also appears comfortable with the level of the exchange rate, noting that the AUD remains within the range that it has been in over the past two years.
Local focus will now turn to tomorrow mornings RBNZ statement. No change is expected to the OCR, but the statement always has the potential to move the currency, and comments from Governor Orr will be closely watched by markets.
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