The New Zealand dollar held its own against its trans-Tasman counterpart after Australian treasurer Jim Chalmers put a modest tax cut on the table in the run-up to the Lucky Country’s looming election.
The Labor administration revealed the new tax cut – lowering the 16% rate for incomes between A$18,201 and A$45,000 to 14% over the next two years – as it prepares for a close election in May.
The Australian budget projected an improving economic outlook, but forecast persistent federal government deficits, with no return to surplus for at least a decade.
“The budget assesses that Australia has likely achieved a ‘soft landing’, bringing inflation back down while maintaining relatively low unemployment,” Westpac economists said in a note. “The dominant risk however looks to have shifted from the inflation trajectory to the extent to which global trade disturbances may impact, especially via the effects associated uncertainty may have on confidence.”
The kiwi dollar was little changed at 91 Australian cents at 7am in Auckland from 90.99 cents yesterday, and traded at 57.37 US cents from 57.22 cents.
Australian futures are pointing to a 0.6% increase for the S&P/ASX 200 index today.
Dwindling confidence
Meanwhile, stocks on Wall Street were mixed as investors were unnerved by a soft consumer confidence reading, halting a rally on the prospect of a narrower tariff programme than earlier feared.
European stock markets were broadly stronger on the prospect of fewer tariffs being imposed by the US when President Donald Trump lifts the veil on the programme next week.
Nasdaq-listed Trump Media and Technology Group rallied after signing a non-binding agreement with crypto.com to launch exchange-traded funds for digital assets on its platform. Bitcoin slipped 0.4% to US$87,971.
Oil prices fell, with Brent crude futures down 0.1% at US$72.28 a barrel, after Ukraine’s President Volodymyr Zelenskyy agreed to a truce with Russia covering the Black Sea and energy infrastructure. The White House will help Russia boost exports of grain fertiliser through the maritime channel as part of the deal.
Australia is due to release its monthly inflation reading today, while there’s no major data scheduled on this side of the Tasman today. Retailer KMD Brands is due to report its first-half earnings today.
Reporting by Paul McBeth. Image from Daniel Morton on Unsplash.