Australian dollar steadies ahead of RBA, kiwi braces for election risk
TLT•The Australian dollar held at $0.7030 ahead of an expected Reserve Bank of Australia rate hike to 4.85%, while the New Zealand dollar slipped 0.2% to $0.5616 ahead of jobs data and a Saturday election.
1. RBA decision ahead
The Australian dollar was little changed at $0.7030 on Monday. Markets put the chance of a quarter-point hike on Tuesday at nearly 90%; 30 of 32 economists surveyed expected the RBA to raise its cash rate to 4.85%, an 18-year high.
2. Kiwi faces busy week
The New Zealand dollar fell 0.2% to $0.5616 after the Reserve Bank of New Zealand unexpectedly held its rate at 2.75%. Jobs data due Wednesday could affect expectations for a December hike, currently priced at 75%; Bank of New Zealand forecast third-quarter employment growth of 0.4% and an unemployment rate of 5.6%.
3. Election could affect outlook
New Zealand votes on Saturday, with Prime Minister Christopher Luxon’s National-led coalition facing voter concerns over living costs, unemployment and the weak economy. Labour has signaled it wants to restore the central bank’s employment mandate. Commonwealth Bank of Australia economist Kristina Clifton said the kiwi could rise modestly and bond yields fall modestly if the current coalition wins; a Labour-led coalition with substantial Green leverage could weigh on the currency and lift government bond yields if debt-sustainability concerns increase.
