Kiwi braces for RBNZ decision, Aussie tries to steady after setback

According to Business Recorder, the New Zealand dollar climbed 0.2 per cent to $0.5919 on Monday as currency traders positioned ahead of a rate increase that is widely anticipated this week. Markets expect the Reserve Bank of New Zealand to lift its benchmark by a quarter point to 2.75 per cent on Wednesday. Uncertainty remains, however, over how far rates could climb once the bank publishes its updated forecasts.

Oil prices rose more than 2 per cent on Monday after fresh fighting between the United States and Iran, adding to inflation concerns. Investors now price in a policy rate of 3.0 per cent by December, rising to 3.5 per cent next year, as the bank moves from stimulus toward a neutral stance. Francesco Pesole, an ING currency strategist, cautioned about downside risks for the New Zealand dollar and expects two more hikes to 3.0 per cent.

The Australian dollar gained 0.2 per cent to $0.7170, reversing Friday's 0.5 per cent loss that had snapped an eight-week winning run. Monday's data suggested inventories could subtract 0.3 percentage points from Australia's second-quarter GDP, while a Reuters poll pointed to modest growth. Markets put a 56 per cent chance on a fourth Reserve Bank of Australia rate increase next month, and a move by November is nearly fully priced in.