Tuesday 18th June 2019
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The New Zealand dollar was largely steady against the greenback after soft data in the US and ahead of the Federal Reserve's open market committee meeting.
The kiwi was trading at 64.94 US cents at 7:45am from 65.06 US cents at 5pm in Wellington. The trade-weighted index was at 71.68 points from 71.74.
The US dollar came under some pressure after the Empire State Manufacturing Index, which measures activity in the New York area, fell to minus 8.6 in June, from 17.8 in May. Economists had been expecting it to be 11.5. It was the lowest reading and the first time the index was negative since October 2016.
Markets, however, are largely treading water ahead of the Fed’s policy-setting committee, which is due to release its latest statement and economic projections early Thursday New Zealand time after the end of a two-day meeting. Fed Chairman Jerome Powell will hold a press conference shortly after.
According to Reuters, analysts expect the “dot plot” of year-end forecasts for the Fed’s benchmark overnight lending rate - the federal funds rate - will show a growing number of policymakers are open to cutting rates in the coming months, but nowhere near as aggressively as investors expect or US President Donald Trump wants.
Overall, "markets were subdued overnight as they look for direction from the meeting of the Federal Open Market Committee which commences this evening. While no change to interest rates are expected, acknowledgement is expected of the deterioration in the international environment and downside risk for growth," said ANZ FX/rates strategist Sandeep Parekh.
Today, house price data for both Australia and China and the minutes from the Reserve Bank of Australia's June meeting will also garner investors' attention, he said. Markets will be keen to see if the RBA’s dovish bias is supported by the minutes, said Parekh.
Domestically, the market will be watching for the results from overnight Global Dairy Trade auction early tomorrow, followed by New Zealand’s March quarter GDP data due out at 10:45am on Thursday.
Economists expect the economy expanded 0.6 percent in the three months, faster than the Reserve Bank’s 0.4 percent forecast.
The New Zealand dollar was trading at 94.75 Australian cents from 94.59, at 51.77 British pence from 51.67, at 57.86 euro cents from 58.00, at 70.49 yen from 70.65, and at 4.4965 Chinese yuan from 4.5046.
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