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NZ dollar treading water; Brexit, FOMC in focus

Tuesday 29th October 2019

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The New Zealand dollar tread water early Tuesday as the market awaits further news on Brexit.

The kiwi was trading at 63.45 US cents at 8am in Wellington from 63.47 cents late yesterday in New York. New Zealand markets were closed for the Labour Day holiday. The trade-weighted index was at 70.16 points from 70.12.

The European Union agreed to three-month Brexit delay as UK Prime Minister Boris Johnson sought a snap election to secure a majority capable of passing the deal.  Brexit can occur the first day of the month after the Withdrawal Agreement has been ratified or on 1 February, whichever is the earliest. The EU says there can be no re-negotiation during the extension period, according to ANZ Bank FX/rates strategist Sandeep Parekh.

The kiwi was trading at 49.31 British pence from 49.47 pence. 

Parekh noted that the kiwi failed to gain much traction despite positive headlines out of US-China trade talks. President Donald Trump said on Monday he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate on the timing, according to Reuters.

“With little on offer domestically this week, the upcoming FOMC meeting and the US data pulse will drive the kiwi,” said Parekh. The US Federal Reserve is expected to cut rates by 25 basis points at their next meeting on Wednesday.

The New Zealand dollar was at 92.72 Australian cents from 92.91, at 57.15 euro cents from 57.26, at 69.15 yen from 68.96, and at 4.847 Chinese yuan from 4.4833


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