NZ dollar little changed near key support level after US CPI, dovish RBNZ

Monday 15th May 2017

The New Zealand dollar starts the week little changed near a key support level that hasn't been seriously breached in about 11 months following weaker headline US inflation figures and a flat interest rate track from the Reserve Bank last week that sent the kiwi tumbling.

The local currency traded at 68.45 US cents as at 8am in Wellington from 68.55 cents in late New York trading on Friday. The trade-weighted index was at 74.68 from 74.83 in New York, below the RBNZ's latest projected average for the TWI in the June quarter of 76.

The kiwi has failed to sustainably push below 68.50 US cents in the past few weeks, having last been convincingly lower in early June last year and that level is seen by chart watchers as a key resistance level.The currency tumbled after the Reserve Bank's monetary policy statement last week, that showed no hint of tightening monetary conditions, but didn't react much to weaker US economic data or comments from Federal Reserve Bank of Chicago chief Charles Evans that one rate hike this year may be more appropriate than the two the Fed has flagged, but he could still support two hikes.

The kiwi "still looks to be a sell on any rally given dovish RBNZ nuances and a US Fed that is set to stick to getting on with the job at hand," said Cameron Bagrie, chief economist at ANZ Bank New Zealand.

Today, traders in the New Zealand dollar will be watching for the Performance of Services (PMI) index for April, first-quarter retail sales and a speech by RBNZ assistant governor John McDermott about the perils of forecasting in an uncertain world.

The kiwi traded at 53.13 British pence from 53.06 pence on Friday. The local currency traded at 62.62 euro cents from 62.66 cents and fell to 77.46 yen from 77.65 yen. It declined to 92.55 Australian cents from 92.86 cents and fell to 4.7211 Chinese yuan from 4.7246 yuan.

(BusinessDesk)

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