Aussie and Kiwi Set for a Decline

By TraderVox.com

Tradervox (Dublin) – The New Zealand and Australian dollars are set for a weekly decline. The Australian dollar continues to decline after a report showing that the nation registered a trade deficit in the fourth quarter. The New Zealand dollar is headed for five day decline in two months against the yen after the Central Bank Governor Alan Bollard indicated in a news interview that an interest-rate cut is a possibility if the strong currency undermines the economic growth. The decline in the South Pacific currencies was reduced by reports showing that the inflation in China reduced last month.

Greg Gibbs, a Foreign Exchange Strategist at Royal Bank of Scotland Group Plc said that the trade balance data appears like a weak number and it has put some downward pressure on the Australian dollar. This is also as a result of a weaker tone in the economic data in the past two weeks.

The Australian currency was little changed selling at $1.0642 from yesterday when it surged 0.6 percent against the dollar. The Australian dollar has declined 0.9 percent this week. However, the Aussie increased by 0.2 percent against the yen to sell at 86.99 yen after strengthening 1.2 percent yesterday.

The New Zealand dollar increased by 0.2 percent against the US dollar to settle at 82.58 US cents; it also climbed 0.4 percent against the yen to settle at 67.51 yen. The Kiwi is, however, headed for a 0.5 percent decline against the JPY this week. This is the largest weekly drop for the Kiwi since the week ended Dec. 30.

A report from the Bureau of Statistics indicated that the Australian imports outpaced exports adding pressure to the RBA governor Glenn Stevens to end the two-month pause in the interest rates. The Australian economy also slowed in the last quarter and payrolls have fallen in February.

The Reserve Bank of New Zealand governor Alan Bollard have decided to keep the interest rates at record low of 2.5 percent but indicated that a rate cut is a possibility if the strong currency affects the economic growth of the nation.

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