The New Zealand dollar stood near two-month lows on Thursday while its Australian cousin loitered around recent ranges with traders focused on an annual meeting of central bankers. The Australian dollar was stuck at $0.7896, after spending all of this week between $0.7951 and $0.7882. The New Zealand dollar stood at $0.7218, within spitting distance of $0.7198 touched on Wednesday and the lowest level since June 22.
The Kiwi sold-off heavily in the previous session after the New Zealand government downgraded the country's growth outlook for this fiscal year and next. New Zealand government bonds were mixed, sending yields 1 basis point higher at the long end and about 1-2 basis points lower at the short-end of the curve. Australian government bond futures rose, with the three-year bond contract up 1 tick at 98.010. The 10-year contract added 3 ticks to 97.36.
The market was disappointed by the Treasury's pre-election fiscal update "in part because it was viewed as further weakening the government's chances of re-election next month," said Sean Keane of Triple T Consulting, who works under the umbrella of Credit Suisse. New Zealand will see labour leader Jacinda Ardern face off Prime Minister Bill English in one of the most hotly contested elections in the country. "Compared to a few months ago there's a lot more political uncertainty domestically than there was and the election is looking like anyone's really at this stage," said Phil Borkin, senior economist at ANZ.