Australia dollar finds some support in RBA hawks, kiwi totters

According to Business Recorder, the Australian dollar barely moved on Tuesday as a sell-off in global risk assets offset a hawkish signal from the Reserve Bank of Australia, while its New Zealand counterpart fell to levels not seen since April 2025. Minutes from the central bank's latest meeting showed the board fully backed a quarter-point rate rise to 4.60%.

Goldman Sachs economist Andrew Boak described the minutes as hawkish, pointing to the board's focus on domestic excess demand and its scant reference to earlier hikes or economic downside risks. He still expects the RBA to stay on hold, yet sees a further increase in November as more plausible depending on third-quarter inflation data due later this month. Those figures could show core inflation jumping 1.0% in the quarter, leaving the annual rate at 3.6%, far above the central bank's 2% to 3% target.

The Aussie held near $0.6956 after slipping from an overnight high of $0.6995 as the US dollar firmed broadly. Ironically, the kiwi, at $0.5585 and 0.5% lower overnight, hit a 17-month low as local bonds outperformed in a recent global debt sell-off. The yield gap between 10-year New Zealand bonds and Treasuries has moved from positive early this year to negative now, even as markets put a 60% probability on a quarter-point increase to 3.0% when the RBNZ meets on October 28.