NZ dollar struggling to gain traction as greenback gets lift

Tuesday 5th November 2019

The New Zealand dollar was weaker after the greenback got a lift from improving global risk sentiment and ahead of the monetary policy decision in Australia.

The kiwi was trading at 64.01 US cents at 8am in Wellington versus 64.56 cents at 5pm yesterday. It was at 92.92 Australian cents from 93.28 Australian cents.

The US dollar benefited as markets were cheered by positive trade headlines. Among other things, investors were buoyed after US Commerce Secretary Wilbur Ross said licenses for United States companies to sell components to Chinese telecom giant Huawei are coming “very shortly.”

“A broadly firmer USD limited the upside for the kiwi,” said ANZ FX/rates strategist Sandeep Parekh. According to Parekh the local currency couldn't break through resistence levels. He tips support at 63.80 US cents and resistance at 64.80 cents. He noted, however, the main event on the day will be the Australian rate decision.

The RBA is widely expected to keep rates on hold at 0.75 percent today, with markets pricing a 4 percent chance of a rate cut. In New Zealand, meanwhile, most economists are still expecting the RBNZ to cut rates to 0.75 percent next week, although market pricing is now at 50 percent.

According to BNZ senior economist Doug Steel, tomorrow’s labour market data will be closely watched as the last major piece of local information ahead of next week’s decision.

BNZ, like Westpac, said it doesn’t think there is a need for a rate cut next week but “if the RBNZ sticks to the decision-making framework it has made plain, we think it will feel compelled to ease policy further.”

The New Zealand dollar was trading at 49.68 British pence from 49.90, at 57.48 euro cents from 57.80, at 69.53 yen from 69.86 and at 4.4992 Chinese yuan from 4.5359.

The trade-weighted index was at 70.52 from 70.91.

(BusinessDesk)

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