The Australian and New Zealand dollars rose 0.4% and 0.5%, respectively, after falling to multi-month lows last week. New Zealand’s election outcome remained too close to call, while markets priced in an 81% chance of a U.S. rate rise in December.
The Australian dollar rose 0.4% to $0.6886 on Monday after falling 2.5% last week to a seven-month low of $0.6855. The New Zealand dollar gained 0.5% to $0.5572 after losing 1.5% last week and reaching a 16-month trough of $0.5529.
Early New Zealand election results showed the incumbent centre-right coalition led by Prime Minister Christopher Luxon maintaining a slim majority, but the outcome remained too close to call. Official results were due November 27. Citi Australia chief economist Josh Williamson put the chance of the centre-right government retaining power at 55%.
Stronger-than-expected U.S. jobs data and hawkish comments from Federal Reserve policymakers led markets to price in an 81% chance of a December rate rise. In Australia, the Reserve Bank raised rates for a fifth time this year in a 6-3 vote last week and dropped its tightening bias; swaps implied an 80% probability that rates had peaked, with 30 basis points of easing priced in by the end of next year.
