New Zealand dollar bounces after overnight wobble, Aussie drifts sideways

Business Recorder reported that the New Zealand dollar rose 0.2 per cent on Friday to $0.5865, recovering from an overnight slip to as low as $0.5822. Traders kept betting heavily on a September increase in the 2.5% cash rate, with about 85% of pricing reflecting a rise. The kiwi is down 0.4% for the week.

The Aussie was little changed at $0.7061 and fell only 0.1% for the week, with support seen near $0.7022. The Reserve Bank of Australia left rates unchanged at 4.35%, its second hold, in a decision that was largely expected. Governor Michele Bullock said personally she thought rates might have to rise again, citing the closed Strait of Hormuz and weak productivity growth.

Stephen Smith, a partner at Deloitte Access Economics, still expects a November hike and says the central bank faces a narrow path. Data showed another steep drop in home prices in the June quarter, and Melinda Cilento, who heads the Committee for Economic Development of Australia, was named a new monetary policy member. Markets price roughly a 70% chance of one final move to 4.60% by early next year.