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2026-11-09 14:32:27
[Australian and New Zealand Dollars Rebound from Lows Amidst Uncertainty Regarding New Zealand Government Formation] 1. The Australian and New Zealand dollars rebounded on Monday from last week's sharp declines. Previously, a global stock market slump and rising expectations of a US interest rate hike pushed the two currencies to multi-month lows. The Australian dollar rose 0.45% to 0.6892 against the US dollar, after falling 2.5% last week and hitting a seven-month low of 0.6855; the New Zealand dollar rose 1.06% to 0.5600 against the US dollar, after falling 1.5% last week and hitting a 16-month low of 0.5529. 2. Stronger-than-expected US jobs data on Friday, coupled with hawkish comments from Federal Reserve officials, led the market to expect an 81% probability of a December rate hike, resulting in the US dollar recording its biggest gain in nearly five months. This weighed on the Australian and New Zealand currencies last week. 3. Preliminary election results in New Zealand show that the incumbent center-right coalition led by Prime Minister Laxson still holds a slim majority, but the outcome is uncertain. Official results will be announced on November 27. Citibank Australia's chief economist, Josh Williamson, believes the center-right government has a 55% chance of re-election, as New Zealand voters typically don't allow a government to be ousted after only one term. If in power, the Reserve Bank of New Zealand (RBNZ) is expected to maintain its sole mandate of inflation control, potentially leading to reduced fiscal spending, a smaller public sector, and an expanded KiwiSaver superannuation scheme, which should support the New Zealand dollar and bonds. 4. In Australia, RBA Assistant Governor Hunt stated that there is currently insufficient evidence to suggest that AI has significantly boosted productivity and caused mass unemployment, but she warned that the technology could increase risks to financial stability. RBA member Baker will speak on Thursday; the RBA decided last week to raise interest rates for the fifth time this year by a 6-3 vote, but removed the phrase "further increases in the interbank rate if necessary." The market will be watching to see if Baker is one of the three dovish members.
