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NZ dollar loses ground, weighed by stronger greenback after ECB makes no change

Friday 27th July 2018

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The New Zealand dollar lost ground against the US dollar, which benefited from euro weakness after the European Central Bank left interest rates unchanged.

The kiwi traded at 67.84 US cents at 8:30am in Wellington from 68.36 US cents as at 5pm in Wellington yesterday.  The trade-weighted index was 73.01 from 73.26 yesterday. 

The greenback gained after the ECB reiterated its plans to wind down the asset purchasing programme until year-end and emphasized that it wouldn't commence lifting interest rates until at least next summer. 

"The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 percent over the medium term," it said in a statement. 

The New Zealand dollar  "gave up yesterday’s gains overnight on a stronger USD. The currency appears likely to continue to be driven by the USD half of the equation for a while yet," said ANZ Bank New Zealand senior macro strategist Philip Borkin in a note.

Today, investors will be watching for the ANZ consumer confidence survey domestically, followed by Japanese CPI, Australian PPI, and Chinese industrial profits. 

The main event risk, however, will be the US second-quarter gross domestic product data due later in the global trading day. Economists expect 4.3 percent growth, according to MarketWatch, which would be the fastest since the third quarter of 2014.

The kiwi traded at 58.25  euro cents from 58.28 cents late yesterday in Wellington and at 51.74 British pence from 51.78 pence. It was at 75.45 yen from 75.75 yen yesterday and at 4.6033 Chinese yuan from 4.6276 yuan.


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