Kiwi jumps against weak Aus dollar

  • 13/05/2016
WELLINGTON, NEW ZEALAND - SEPTEMBER 01:  The new $5 banknote being examined at the Reserve Bank of New Zealand on September 1, 2015 in Wellington, New Zealand. The Reserve Bank and John Key have launched the first two denominations on a series of new banknotes that include new security features. The new $5 and $10 banknotes will be released from mid-October 2015.  (Photo by Mark Tantrum/Getty Images)

The New Zealand dollar jumped to its highest level against the Australian dollar in more than two months, after expectations for Australian inflation fell.

That stoked speculation of further interest rate cuts in Australia.

The kiwi touched 93.22 Australian cents, and was trading at 93.04 cents at 8am in Wellington, from 93.03 cents at 5pm on Thursday. The local currency slipped to 68.16 US cents from 68.31 cents.

Traders have been increasing their bets for future interest rate cuts in Australia after the Reserve Bank of Australia surprised many economists by cutting the benchmark interest rate this month following weaker-than-expected first quarter inflation data.

Expectations for future cuts were stoked further after Thursday's Melbourne Institute survey of consumer inflationary expectations showed expectations fell to 3.2 percent from 3.6 percent.

"The Australian dollar is the weakest major currency," BNZ currency strategist Jason Wong said.

"Inflation expectations data are usually ignored, but with heightened sensitivity about the inflation outlook at present, a drop in a consumer-focused measure from 3.6 percent to 3.2 percent triggered some Australian dollar selling."

In New Zealand, the local focus will be on first quarter retail sales data.

The New Zealand dollar slipped to 47.16 British pence from 47.30 pence, it edged up to 59.91 euro cents from 59.80 cents, gained to 4.4393 yuan from 4.4412 yuan, unchanged at 74.33 yen.

NZN