Australia, NZ dlrs sidelined by steady rate outlooks


Reuters

By Wayne ColeSYDNEY, June 20 (Reuters) - The Australian dollar marked
time on Tuesday as the country's central bank reaffirmed the
long-term outlook for steady interest rates, while the New
Zealand dollar awaited cues from a policy decision later in the
week.
    Moves were marginal, with the Aussie <AUD=D4> barely changed
on the day at $0.7594. It reached a 10-week top of $0.7636 last
week but has since failed repeatedly to sustain a breach of
resistance above $0.7630.
    The New Zealand dollar <NZD=D4> had steadied at $0.7235,
having recoiled from a $0.7298 high on Monday.
    Minutes of the Reserve Bank of Australia's (RBA) June policy
meeting showed a heightened sense of concern over financial
stability as households struggle with record levels of debt.
    The Aussie had taken a minor hit on Monday when Moody's
downgraded Australia's banks by a notch, citing risks from high
household debt and a frothy housing market. [nL3N1JG5J3]
    The central bank has repeatedly warned that cutting rates
further would only stoke the borrowing binge in housing. Yet
neither is it in any position to tighten as household incomes
are already being squeezed by paltry wages growth.
    "This highlights the focus of monetary policy at present,
with considerations around financial stability trumping almost
everything else including sub-target inflation," said Su-Lin
Ong, head of Australian economics at RBC.
    "The RBA looks set to remain in watch-and-wait mode in the
coming months."
    Interbank futures <0#YIB:> imply virtually no chance of a
move in the 1.5 percent cash rate this year and only a slight
risk of a hike by the middle of 2018.
    The U.S. Federal Reserve has already raised rates twice this
year and is tipping another, while central banks in the U.K. and
Canada have recently taken more hawkish turns.
    On Monday, New York Fed President William Dudley expressed
confidence that U.S. inflation would pick up as forecast and
allow another hike in rates later this year. [nL1N1JG0CX]
    The Reserve Bank of New Zealand holds its rate decision on
Thursday and is considered all but certain to keep rates at a
record low of 1.75 percent.
    Indeed, the central bank's long term forecasts imply it
might not raise rates until late in 2019.
    New Zealand government bonds <0#NZTSY=> were all but steady.
    Australian government bond futures dipped slightly, with the
three-year bond contract <YTTc1> off 3 ticks at 98.150. The
10-year contract <YTCc1> eased 1.5 ticks to 97.5350.

 (Editing by Shri Navaratnam)
 ((Wayne.Cole@thomsonreuters.com; 612 9321 8162; Reuters
Messaging: wayne.cole.thomsonreuters.com@reuters.net))

Keywords: AUSTRALIA FOREX/



This article appears in: Stocks , World Markets , Economy , 401k , Retirement


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