NZ dollar little changed as focus remains on upcoming Fed meeting

Tuesday 26th July 2016

The New Zealand dollar was little changed as investors continued to eye the upcoming Federal Reserve policy meeting in the hopes of a steer on when the world's biggest central bank might start raising interest rates.

The kiwi traded at 69.89 US cents at 8am in Wellington from 69.79 cents yesterday. The trade-weighted index was at 75.11 from 74.98 yesterday.

Stocks on Wall Street edged lower as oil prices declined, weighing on shares of Chevron and ExxonMobil as investors await a flurry of company earnings and the Federal Open Market Committee meeting later this week. Company results on the Standard & Poor's 500 index have generally beaten expectations, which would typically support risk-sensitive assets such as the kiwi dollar, upbeat data has lifted expectations for a US rate hike this year, while at the same time New Zealand's Reserve Bank has signalled it will lower rates next month.

"The market will have tomorrow night’s US FOMC meeting firmly in its sights," Kymberly Martin, senior market strategist at Bank of New Zealand in Wellington, said in a note. "But we would be surprised if the inherently dovish Fed were to cause the market to notably ramp up its rate hike expectations, and hence provide a significant boost to the US dollar. That task will likely fall to future data delivery."

New Zealand June trade figures will be published at 10.45am and Reserve Bank data on June mortgage lending is scheduled for release at 3pm.

The local currency edged up to 93.51 Australian cents from 93.35 cents ahead of inflation data across Tasman tomorrow. The consumer price index will be watched to shore up bets the Reserve Bank of Australia will cut interest rates next week.

The kiwi decreased to 73.91 yen from 74.17 yen yesterday ahead of the Bank of Japan policy meeting later this week. Governor Haruhiko Kuroda is expected to boost the bank's asset purchase programme to try and stir moribund inflation in the world's third-biggest economy.

The local currency was little changed at 53.20 British pence from 53.14 pence yesterday and traded at 63.57 euro cents from 63.58 cents. It increased to 4.6668 Chinese yuan from 4.6598 yuan yesterday.

BusinessDesk.co.nz

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