The Australian dollar slipped on Tuesday after bulls were wrong-footed by a larger-than-expected current account deficit, while the New Zealand dollar scaled a three-month peak. The Australian dollar was down around 20 ticks at $0.7467 and away from Monday’s high of 75 cents. Support was found around $0.7445.
It dropped a third of a US cent to $0.7458 after data showed Australia’s current account deficit narrowed to A$3.1 billion in the first quarter. That was the smallest shortfall since 2001 but disappointed forecasts for a balanced outcome. Some investors were even positioned for a small surplus, which would have been the first since 1975.
The outcome could weigh on gross domestic product growth due on Wednesday. The median forecast of a Reuters poll is that the economy has grown around 0.2 percent in the first quarter from the previous three months, but some analysts fear a small contraction.
All eyes are set on the Reserve Bank of Australia (RBA) which will release its monthly policy statement at 04:30 GMT. The central bank is considered almost certain to hold rates at a record low of 1.5 percent, as it balances the risk of fuelling further borrowing in the country’s home market against tepid inflation.
The majority of economists polled by Reuters predicted rates would be held steady until the middle of 2018, while 24 out of 52 forecast a rate hike by September next year against 5 seeing an easing. The New Zealand dollar reached $0.7158, the highest since early March. Resistance was found around $0.7167.
It has gained more than three cents since mid-May, largely due to solid economic data at home and an upbeat outlook for dairy, New Zealand’s top export earner. New Zealand government bonds gained, sending yields 3.5 basis points lower.
Australian government bond futures were mixed, with the three-year bond contract up 2 ticks at 98.320. The 10-year contract also gained 2 ticks to 97.5950, while the 20-year contract shed 1 tick to 97.0050.