NZ dollar follows Australian dollar lower on weaker home loans

The Australian dollar sank from a four-month high to 92.80 US cents after data showed home loans fell 1.8% in February from a month earlier. That's more than the 1% decline expected. Investors pared back their expectations for further Australian rate hikes after RBA Assistant Governor Guy Debelle said the target cash rate is "not far" from its average level. The market is betting the RBA will boost interest rates by 91 basis points over the coming 12 months, according to the Overnight Index Swap curve, that's down from 93 points yesterday.  

"The kiwi was hamstrung by a weaker Australian dollar which suffered on the weaker data and comments from the RBA on a slower pace of tightening," said Mike Jones, strategist at Bank of New Zealand. "The kiwi looks well-supported around these levels, and it's seeing a lot of buyers on dips." 

The kiwi declined to 71.16 US cents from 71.24 cents yesterday, and was little changed at 76.73 Australian cents from 76.72 cents. It dropped to 65.86 on the trade-weighted index, or TWI, a measure of the currency against a basket of five trading partners, from 65.91 yesterday, and sank to 66.34 yen from 66.65 yen. It was unchanged at 52.40 euro cents, and gained to 46.30 pence from 46.15 pence yesterday.  

Jones said the currency may trade between 71 US cents and 71.90 cents today, and may have "another crack at 72 cents" if this week's data shows improving demand in households.