NZ dollar rises to 6-month high vs pound as BoE seen delaying rate hike

Tuesday 15th December 2015

The New Zealand dollar touched a six-month high against the British pound after comments by Bank of England deputy governor Minouche Shafik pushed out expectations for a rate hike.

The kiwi reached 44.86 British pence, and was trading at 44.74 pence at 8am in Wellington, from 44.15 pence at 5pm yesterday. The local currency jumped to 67.76 US cents, from 67.07 cents yesterday ahead of this week's Federal Reserve interest rate decision.

The pound sunk after the BoE's Shafik said in a speech to the Institute of Directors that she wanted to see sustained growth in wages that would push up inflation before backing higher interest rates. The comments come after Britain's central bank last week kept interest rates at a record low 0.5 percent, citing declining oil prices and slower wage growth.

The pound "was particularly weak, coming under pressure as oil prices fell," Bank of New Zealand currency strategist Jason Wong said in a note. "Furthermore, Deputy Governor Shafik, who has been on the hawkish side of the fence, said that she would 'proceed with caution' when considering voting for a rate hike."

In New Zealand today, the Treasury publishes the government's half-year fiscal and economic update at 1pm. Tonight, all eyes will be on the GlobalDairyTrade auction where NZX futures are signalling a pick up in prices for New Zealand's largest commodity export.

In Australia today, the central bank publishes the minutes to its December meeting, and a mid-year update of the Federal Budget is likely to show a deterioration due to lower commodity prices.

Tonight, the US and UK release November inflation data, while Europe releases the ZEW economic sentiment survey.

The New Zealand dollar advanced to 93.44 Australian cents from 93.18 cents yesterday, rose to 61.54 euro cents from 61.20 cents, gained to 81.80 yen from 81.26 yen, and jumped to 4.3765 yuan from 4.3309 yuan. The trade-weighted index increased to 73.65 from 73.08 yesterday.

BusinessDesk.co.nz

Comments from our readers

No comments yet