Sharechat Logo

NZ dollar eases amid speculation on RBNZ and RBA rate cuts

Friday 27th September 2019

Text too small?

The New Zealand dollar was slightly weaker after gaining a third of a US cent through a volatile week in which central banks featured large.

The kiwi was trading at 62.90 US cents at 5pm in Wellington from 63 cents at 8:10am. That was down from the week's high at 63.48 cents but up from 62.56 cents in New York last Friday. The trade-weighted index was at 70.27 from 70.38.

Both the Reserve Bank of New Zealand and Reserve Bank of Australia governor Philip Lowe failed to provide strong signals about their next moves, with the RBNZ leaving its cash rate at 1 percent after Wednesday's review. The US Federal Reserve dampened down expectations of further cuts after it cut its Fed funds rate earlier this month.

"Globally, we haven't had anything worse and the data hasn't gotten any worse and in fact it has stabilised in some cases," says Imre Speizer, currency strategist at Westpac.

"The focus in the very short term for kiwi markets is `are we going to get a cut in November?'," he says. Currently, only about 18 basis points of the expected 25-point cut is priced into the market.

It's a similar story across the Tasman where the market has priced in 19 basis points of an expected 25-point cut next Tuesday.

"We think they will cut but I wouldn't say it's all but certain," Speizer says.

If market pricing stays where it is, "that means we will get a reaction if there is a cut. We will see the Aussie fall and it will fall against the New Zealand dollar as well."

That would probably drag the kiwi down against the US dollar as well.

Other market concerns, such as Brexit and the US-China trade war continue to roil away in the background and are a long way from being settled.

The most recent news on the trade front is that US President Donald Trump has said China has started buying US farm products ahead of high-level negotiations resuming early next month.

The New Zealand dollar was at 93.07 Australian cents from 93.29, at 51.01 British pence from 51.11, at 57.57 euro cents from 57.66, at 67.73 yen from 67.93, and at 4.4883 Chinese Yuan from 4.4912.

The two-year swap rate edged down to a bid price of 0.9432 percent from 0.9463 yesterday while 10-year swaps fell to 1.1950 percent from 1.2100.

(BusinessDesk)

NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.



  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:

NZ dollar consolidates weekly gain of more than a US cent
NZ dollar holds gains on improved dairy, bank capital outlook
MARKET CLOSE: NZ shares gain; banks rally on Reserve Bank capital decision
NZ dollar rises; bank capital rules less harsh than expected
RBNZ relaxes capital requirements, allows preference shares, extends phase-in
NZ dollar extends gain amid mixed US data, possible trade progress
MARKET CLOSE: NZ shares dip on eve of major regulatory decisions
NZ dollar sees off global headwinds, holds above 65 US cents
NZ dollar holds above 65 US cents; dairy auction prices mixed
Dairy index falls on weaker butter, milk fat demand

IRG See IRG research reports