New Zealand Dollar Slips for Second Day as Rate Cut Bets Riseby
New Zealand’s dollar fell for a second day as market-based odds increased that the central bank will cut interest rates in November.
The kiwi dropped against all but one of its 16 major counterparts after the Reserve Bank of New Zealand left rates unchanged on Thursday but said it intends to cut borrowing costs to boost inflation. The currency slipped against the Australian dollar for a third day, after climbing to the highest level in more than a year against its Antipodean neighbor last week.
“The Reserve Bank of New Zealand reminded markets it is likely to cut rates on Nov. 10,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Wellington. “ The Aussie-kiwi cross is also very undervalued relative to interest rates and commodity prices.” Australia’s currency is likely to reach NZ$1.06 in the coming weeks, he said.
The kiwi fell 0.5 percent to 72.79 U.S. cents at 11:59 a.m. in Sydney, after sliding 0.5 percent Thursday. It has pared gains for the week to 0.2 percent. New Zealand’s dollar slid 0.3 percent to NZ$1.0483 per Aussie.
Futures are pricing in a 74 percent chance the RBNZ will cut rates on Nov. 10, up from 70 percent Thursday.