Sharechat Logo

NZ dollar weaker as market positions for dovish central bank statement

Tuesday 8th August 2017

Text too small?

The New Zealand dollar fell on a trade-weighed index basis ahead of what is expected to be a dovish statement from the Reserve Bank on Thursday.

The TWI was at 77.43 at 5pm from 77.93 late yesterday in Wellington. It traded at 92.90 Australian cents from 93.20 cents late yesterday and at 73.53 US cents versus 73.99 US cents yesterday. 

The central bank is widely expected to keep rates on hold at 1.75 percent at Thursday's rate review but is now expected to signal rates on hold for longer than prior forecasts. In May it said rates would be on hold until 2019 and it could now signal 2020, according to economists. 

"I think people are realising the RBNZ will be a bit more dovish so the New Zealand dollar has been under a bit of pressure," said ANZ Bank New Zealand senior economist Phil Borkin.  "We certainly think they are going to flatten the official cash rate profile and certainly not talk about rate hikes anytime soon and they might even be a bit more explicit in terms of a few nerves about the currency. But we don't expect them to come out with an explicit easing bias by any means." 

Across the Tasman investors were cheered when the strong run shown by the Australian business sector continued in the July NAB business survey, with business conditions hitting their highest level since 2008. The data weighed on the kiwi and Borkin said it could ease further, in particular ahead of Thursday's monetary policy statement. 

Borkin also said the kiwi may also be faltering against the crosses on some pre-election jitters after the shakeup in the Labour Party that saw Jacinda Ardern replace Andrew Little as leader of the opposition. "The market may be reacting to some election uncertainty," after being largely complacent, he said. "It's become more interesting but what we really need is another poll." 

The kiwi declined to 56.37 British pence from 56.65 pence and was at 4.9250 yuan from 4.9740 yuan. It dipped 62.26 euro cents from 62.72 cents and fell to 81.33 yen from 81.90 yen.

New Zealand's two-year swap rate fell 1 basis point to 2016 percent while the 10-year swaps fell 5 basis point to 3.16 percent.

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report