The Australian Dollar is forecasted to come under pressure against the New Zealand currency courtesy of an aggressive RBA.
The Australian dollar is today broadly firmer on the global currency markets:
- The British pound to Australian dollar is 0.02 pct down on Friday's close at 1.7039.
- The Australian dollar to US dollar exchange rate is 0.22 pct higher at 0.9415.
- The Australian dollar to New Zealand dollar is 0.05 pct higher at 1.1260.
Be aware that the above are spot market inter-bank currency rates. Your bank will charge a spread when transferring your money. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you up to 5% more currency. Please learn more here.
Australian dollar vs New Zealand dollar: RBA aggression ahead
Alvin Pontoh at TD Securities has told clients that the New Zealand dollar is likely to maintain a positive bid against its Australian neighbour as the RBA acts to stem a strengthing AUD.
"Our view is that a lower currency is a much more crucial factor in ensuring a decent economic growth rate in
Australia than in NZ, given the latter’s superior economic growth outlook.
"As such, we firmly believe that the RBA will lean against the latest bout of currency strength much more forcefully than the RBNZ. The upshot is that AUDNZD could potentially break below 1.13 in the coming weeks."
Australian Dollar forecasted to come under pressure as RBA fights rising currency
TD Securities say they judge that after sitting on the sidelines for the last few months, the RBA is likely to be back jawboning the currency at its next meeting in October.
The September Board minutes described the AUD to be merely “at a high level” and expressed hope to see “some further decline in the exchange rate”.
"How the RBA might choose to talk down the Aussie dollar next month is any one’s guess.
"In May, for example, the RBA described the AUD’s resilience (at the time it was $US1.02) as “unusual” given the decline in commodity prices. Whether or not the RBA will apply a similar characterization, or adopt a fresh approach, is any one’s guess. Fed policy rather than commodity prices."
"What we can be certain at this point is that the RBA will not sit back passively. One possibility is the re-introduction of an explicit easing bias by stating there is scope to cut rates in view of the inflation outlook (which is what the RBA had been expressing up to the August meeting, when it last cut rates)."