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NZ dollar barely budges ahead of RBA policy review

Tuesday 7th August 2018

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The New Zealand dollar barely moved as investors prepare for central bank meetings on both sides of the Tasman, with little action on the trade war front overnight. 

The kiwi traded at 67.31 US cents as at 8am in Wellington from 67.36 cents yesterday and was at 91.07 Australian cents from 91.16 cents. 

The Reserve Bank of Australia is expected to keep the target cash rate at 1.5 percent today, with gross domestic product seen growing around a 3 percent pace on the other side of the Tasman. While the RBA isn't expected to shift its policy stance any time soon, it hasn't been as dovish as New Zealand's Reserve Bank, where governor Adrian Orr has kept the door open for a rate cut. Still, Thursday's RBNZ review is also expected to stand pat for now as Orr juggles competing tensions of slowing growth and accelerating inflation. 

"All up, the RBA is expected to strike a modestly less dovish tone than the RBNZ, although that has been the case for a while admittedly. But with a complex set of risks in each country, there’s likely to be something for everyone," ANZ Bank New Zealand chief economist Sharon Zollner and senior macro strategist Philip Borkin said in a note. The kiwi dollar drifted lower overnight and "we doubt it will have enough momentum to break through those levels today (unless the RBA dramatically surprise), with markets waiting for direction from the RBNZ later this week."

No local data is scheduled for today, with the next local event the Global Dairy Trade auction overnight. 

Trade tensions between the US and China have weighed on currency markets for several months. Those tensions remained heightened after China's latest retaliation over the weekend, however, there was no new movement during Northern Hemisphere trading. 

The kiwi increased to 4.6107 Chinese yuan from 4.5998 yuan yesterday and traded at 74.97 yen from 75.02 yen. It was little changed at 58.25 euro cents from 58.31 cents yesterday and edged up to 51.99 British pence from 51.86 pence. 

The trade-weighted index was at 72.68 from 72.66 yesterday. 


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