NZ dollar largely unchanged this week as investors eye up central bank reviews

Friday 27th November 2015

The New Zealand dollar was largely unchanged heading into the week's close as the Thanksgiving holiday in the US sapped trading activity and as investors gear up for a series of central bank meetings next month.

The kiwi traded at 65.72 US cents at 5pm in Wellington from 65.63 cents on Friday in New York last week. It traded at 65.67 cents at 8am, down from 65.87 cents yesterday. The trade-weighted index was at 71.48 from 71.54 yesterday, and 71.57 at last week's New York close.

A BusinessDesk survey of 11 currency analysts on Monday predicted the kiwi would trade between 64.30 US cents and 67.10 cents this week, with five expecting it to gain, two saying it would fall and four betting it would stay largely unchanged.

Trading activity tapered off in the tail-end of the week with the US holiday scaling back activity and leaving markets illiquid. That exacerbated a reluctance from investors to take strong positions with central bank reviews in Australia, Europe, New Zealand and the US coming up over the next three weeks. While Australia, Europe and New Zealand are all seen as having a tilt towards looser monetary policy, the Federal Reserve is tipped to start raising interest rates.

"The major focus is really next week with the central banks - we've got the RBA and ECB (European Central Bank), the (New Zealand) Reserve Bank the following week and then the week after that, the Fed - this is what we've been waiting for, for a long time," said Mark Johnson, senior dealer foreign exchange at OMF in Wellington. "Prior to Thanksgiving there was a bit of squaring up of US dollar positions, which is probably what gave the likes of the kiwi and Aussie a lift."

Reserve Bank data today showed New Zealand's central bank was a net seller of kiwi dollars in October for the first time since April, selling a net $17 million in the month. The Reserve Bank buys and sells currencies through the course of its operations.

New Zealand's two-year swap rates rose two basis points to 2.7 percent at 5pm in Wellington, and 10-year swaps were unchanged at 3.52 percent.

The local currency was little changed at 90.94 Australian cents from 90.98 cents yesterday, and decreased to 4.2015 Chinese yuan from 4.2085 yuan. It slipped to 80.57 yen from 80.74 yen, and was little changed at 61.91 euro cents from 62.01 cents yesterday. The kiwi was almost unchanged at 43.53 British pence from 43.54 pence.

BusinessDesk.co.nz

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