Pound vs New Zealand and Australian dollar: AUD takes NZD Lower Following RBA Jawboning

The downtick in the Aus dollar has helped weigh the NZ dollar in sympathy:

The sterling to Australian dollar exchange rate is 0.44 pct higher at 1.6940.

The sterling to New Zealand dollar rate is 0.08 pct higher at 1.9475.

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Stevens noted that “these levels of the exchange rate are not supported by Australia’s relative levels of costs and productivity,” adding that “it seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today.”

"We remain bearish AUD/USD, forecasting 0.94 in 1 month," says a morning note from Barclays in response to the event.

We would expect others across the foreign exchange markets will adopt a similar approach to the Aus dollar in response to today's events.

The Bank remains relatively pessimistic about the near-term outlook for business investment.

The Governor commented that “the available information suggests that broader investment intentions in the business community remain subdued. It may be a while yet before we can expect to see conclusive evidence of a change here.”

Last week, however, Deputy Governor Lowe was more upbeat about the medium-term outlook for overall non-mining investment (private and public including dwellings) saying that it is the Bank’s expectation that growth will pick-up to at least high single-digit rates at some stage in the next couple of years.

"This has triggered more Aussie weakness, pushing the GBPAUD above 1.69 this morning. With sterling struggling to maintain gains, decent UK data will help to see the rate close above 1.69 today," says Sasha Nugent at Caxton FX.