Sharechat Logo

NZ dollar at 2-week high as inflation lowers rate cut expectations

Wednesday 17th October 2018

Text too small?

The New Zealand dollar rose to a two-week high as yesterday's stronger than expected inflation data lowered traders' expectations for a rate cut. 

The kiwi increased to 65.90 US cents as at 8am in Wellington from 65.68 cents yesterday. The trade-weighted index edged up to 71.87 from 71.75. 

Traders have pared back their bets on the Reserve Bank cutting the official cash rate. The overnight index swaps curve implies an 18 percent chance of a lower rate by August next year, down from 24 percent. Local data yesterday showed the annual pace of inflation rose to 1.9 percent in the September quarter, higher than all forecasts including the RBNZ's 1.4 percent prediction. 

"We still find it highly unlikely that the RBNZ would cut rates in the current environment and expect easing expectations to continue to fade over time," Bank of New Zealand senior markets strategist Jason Wong said in a note. "The NZD faded after the initial move higher, but has regained that ground in overnight trading." 

The GDT price index dipped 0.3 percent at the Global Dairy Trade auction overnight, with prices for whole milk powder falling 0.9 percent to US$2,729 a tonne. That was a smaller decline than futures pricing indicated. 

No local data is scheduled for today. Tomorrow's release of minutes to the Federal Reserve's last policy meeting will be watched but isn't expected to shift traders' views. 

The kiwi traded at 49.95 British pence from 49.97 pence yesterday and increased to 57.90 euro cents from 56.73 cents after European Union chief Brexit negotiator Michel Barnier said more time was needed to reach an agreement. 

The local currency rose to 4.5524 Chinese yuan from 4.5472 yuan yesterday and advanced to 73.90 yen from 73.54 yen. It traded at 92.28 Australian cents from 92.13 cents yesterday. 

(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:

NZ dollar falls against Aussie after strong Oz jobs data
Helen Clark, Don McKinnon front NZ chapter of US think-tank
Fuji Xerox auditor keeps name suppression due to reserved appeal decision
ComCom to eye fuel profits by region, activity
TIL Logistics director Kern steps down and sells out
Turners drops Buy Right Cars moniker in single brand strategy
Mercury, Genesis signal weaker earnings on low lakes, gas shortage
Wrightson gets OIO approval to sell seeds unit, still mulling size of return
Fletcher unit blows whistle on attempted price-fixing in Christchurch
Tourism Holdings falls 24% on open after lowering guidance

IRG See IRG research reports