Sharechat Logo

Kiwi remains on backfoot after dovish surprise from RBNZ

Thursday 28th March 2019

Text too small?

The New Zealand dollar remained under pressure after the central bank unexpectedly said its next rate move was likely to be a cut, dropping its neutral stance.

The kiwi traded at 68.04 US cents at 8am from 68.01 US cents at 5pm in Wellington. The trade-weighted index was at 73.83 from 73.72. 

The central bank kept rates on hold at 1.75 percent yesterday but the New Zealand dollar fell more than a cent when it said the next move was likely to be down. 

"Kiwi remains on the back foot. The RBNZ surprised markets by taking a dovish stance yesterday, which saw pricing of future OCR cuts brought forward dramatically," said ANZ FX/rates strategist Sandeep Parekh. 

"After weeks of no on-the-record communication, this shift in stance was a hand grenade wrapped in a few thin paragraphs," said TD Securities chief Asia-Pacific macro strategist Annette Beacher.  She noted, however, that domestic demand was strong in the final months of 2018 and partial data point to a "decent start" to first-quarter gross domestic product.

Key will be upcoming inflation and jobs data in April and neither are expected to make a May rate cut "a done deal."  

"The governor may 'want to cut,' but we expect the data flow to make the hurdle to cut much higher than he or the market currently thinks," Beacher said. 

Parekh said that given the central bank's concerns about softer domestic growth, today's ANZ business outlook survey - due at 1pm local time - will be closely watched.

Markets will also be watching for any Brexit-related headlines on the day as the UK parliament is set to vote on a series of options. The kiwi traded at 51.34 British pence from 51.59 late yesterday. 

It was at 96.01 Australian cents from 95.71 Australian cents, at 60.40 euro cents from 60.42, at 75.13 Japanese yen from 75.18 and at 4.5779 Chinese yuan from 4.5667.

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

U.S. Dollar Nears a Critical Level That May Trigger a Buying Spree
21st February 2020 Morning Report
Tech Leads Stocks Lower on Virus Fears; Gold Gains
NZ dollar falls on disappointment over Chinese stimulus
Qantas Axes Flights Across Asia as Virus Scares Off Flyers
Some of China's Top Suppliers Are Readying for a Virus Rebound
Plexure signs contract with Super Indo
20th February 2020 Morning Report
Stocks Reach Record Highs After China’s Moves, Fed
Gold breaks through $1,600

IRG See IRG research reports