NZ dollar gains ahead of MPS on weak EU data, gains on Wall Street
Dec. 6 (BusinessDesk) - The New Zealand dollar rose against most of its trading peers after weaker economic data in the euro zone and glimmers of hope in stalled Washington talks over the fiscal cliff, which helped lift equities.
The kiwi dollar rose to 82.55 US cents from 82.48 cents at 5pm in Wellington yesterday. The trade-weighted index rose to 73.66 from 73.52.
The Reserve Bank is expected to keep the official cash rate at a record low today though traders are divided on whether his commentary will be hawkish or dovish and he may single out the persistently high currency for special mention. The Dow Jones Industrial Average climbed about 0.9 percent, recovering from an earlier decline as Washington stayed in focus.
“Our central view is the market will respond to the more dovish tone expressed by the RBNZ, by increasing its pricing for rate cuts in the year ahead,” said Kymberly Martin, a strategist at Bank of New Zealand. “This would likely undermine the relative yield support for the NZD.”
President Barack Obama said at a quarterly meeting of the Business Roundtable in Washington that an agreement on budget negotiations could be reached in a week if the Republicans ceded ground on tax increases for the wealthiest Americans. Meantime, a gauge of services industries in the US rose faster than expected last month.
The kiwi dollar rose to 68 yen from 67.80 yen on continued speculation a change of government in japan this month would herald more aggressive efforts to weaken the currency.
The local currency gained to 78.90 Australian cents from 78.71 cents. It rose to 63.08 euro cents from 62.90 cents after Spain sold fewer bonds than it had targeted and a combined euro zone index of manufacturing and services remained in contraction.
The kiwi rose to 51.25 British pence from 51.19 pence.