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New Zealand dollar loses ground against Aussie

New Zealand dollar loses ground against Aussie

WELLINGTON: The New Zealand dollar has continued to fall against its Australian counterpart on the back of improving data across the Tasman and a lift in iron ore prices.

The kiwi traded at A94.55c from A95c at 8am and A95.61c late on Tuesday in Wellington.

The trade-weighted index fell to 77.56 from 77.79.

“There may be some anticipation going on ahead of upcoming CPI releases,” Kiwibank senior trader Ross Weston.

New Zealand is due to publish second-quarter consumer price index data on July 20 while Australia will publish on July 26.

“There seems to be some divergence going on” as economists begin to publish their forecasts, Mr Weston said.

Central banks in both countries will be keeping a close eye on the inflation data as they have both indicated rates are on hold for the foreseeable future, given the tepid inflationary picture.

He noted the kiwi started falling on Tuesday after weak retail spending on credit and debit cards in New Zealand.

“Everyone was just looking for a catalyst and that was as good as any. It’s called ‘looking for a reason to trade’,” he said.

On Wednesday, the lift in iron ore – currently around a two-month high – is also helping shore up the Aussie.

News the latest Westpac-Melbourne Institute Index of consumer sentiment has risen 0.4 percent to 96.6 in July, compared to 96.2 in June also helped, although pessimists still outnumber optimists.

Looking ahead, Mr Weston said markets will be waiting for US Federal Reserve chair Janet Yellen, who is due to give testimony to Congress on the state of the U.S. economy over two days.

“People will be looking for something out of her about whether they are going to do another hike, or balance sheet reductions,” he said.

Eyes will also be on the Canadian central bank, widely expected to lift rates later in the global trading day.

The kiwi dropped to 63.00 euro cents from 63.51 euro cents late on Tuesday and fell to 82.06 yen from 82.72 yen.

The kiwi inched higher to US72.38c from US72.33c on Tuesday.

It fell to 4.9118 yuan from 4.9210 yuan and traded at 56.30 pence from 56.16 pence.

New Zealand’s two-year swap rate fell 1 basis point to 2.29 percent, and 10-year swaps fell 4 basis points to 3.36 percent.