NZ dollar trades at 3-week low as RBNZ rate cut weighed
NZ dollar trades at 3-week low as central bank seen with room to cut rates
Nov. 12 (BusinessDesk) - The New Zealand dollar traded near a three-week low amid speculation a weak jobs market gives the Reserve Bank more room to cut interest rates to stoke the economy, eroding the yields available in the local currency.
The kiwi dollar fell to 81.39 US cents from 81.45 cents in late New York trading on Friday. The trade-weighted index was at 72.96 from 72.94.
Markets are pricing in a 22 percent chance of a cut to the official cash rate at the central bank’s next meeting on Dec. 6, based on the Overnight Interest Swap curve. A rising jobless rate of 7.3 percent last week drove down the kiwi dollar though on a trade-weighted basis it is still above the 72 level the bank had forecast for the fourth quarter of this year.
“With the risk of an RBNZ interest rate cut now very real, the NZD/USD topside looks unlikely to be tested,” said Mike Jones, currency strategist at Bank of New Zealand. Still, with signs of an improving global economy “we doubt we’re on the cusp of a substantial downward correction.”
Locally, key data out this week is quarterly retail sales on Wednesday, with growth in sales forecast to have slowed to 0.5 percent, according to a Reuters survey, from 1.3 percent three months earlier.
The kiwi dollar fell to 78.23 Australian cents from 78.38 cents and traded at 64 euro cents from 64.06 cents.
The New Zealand dollar slipped to 51.19 British pence from 51.23 pence and was at 64.68 yen from 64.71 yen.