NZ dollar little changed after RBA minutes
NZ dollar little changed after RBA minutes keep rate cut open; Fed tapering looms
By Paul McBeth
Sept. 17 (BusinessDesk) - The New Zealand dollar was little changed in local trading after minutes to the Reserve Bank’s latest policy meeting kept alive the possibility of another rate cut, while the prospect of the Federal Reserve unwinding its money printing programme looms.
The kiwi traded at 81.65 US cents at 5pm in Wellington from 81.62 cents at 8am and 81.88 cents yesterday. The trade-weighted index edged down to 76.58 from 76.65 yesterday.
The Australian dollar fell to as low as 92.88 US cents, trading at 93.01 at 5pm in Wellington from 93.09 cents immediately before the release of minutes to the RBA meeting, showing the board agreed to stay open to a further rate without signalling another was imminent. Australia’s monetary policy is at odds with New Zealand’s where interest rates are expected to start rising next year. The kiwi dollar was unchanged at 87.77 Australian cents.
“The RBA minutes were pretty much in line with the previous minutes,” said Mark Johnson, senior client adviser at OM Financial in Wellington. “The Aussie dollar did fall off and helped drag the kiwi down with it.”
Investors are keenly awaiting the results of this week’s Federal Open Market Committee meeting on Wednesday in Washington, where the US central bank is expected to start slowing the pace of its US$85 billion monthly bond buying programme. Such a move would shore up support for the greenback, which has been devalued by the world’s biggest economy effectively running negative interest rates.
OM Financial’s Johnson said he expects the kiwi dollar to consolidate until the Fed meeting, and if tapering is announced as expected, the local currency will head towards 81 US cents.
Figures tomorrow are likely to show New Zealand’s current account deficit widened to $1.81 billion in the second quarter from $600 million in the first three months of the year, according to a Reuters survey. That will be followed by second quarter gross domestic product on Thursday, which is expected to slower growth of just 0.1 percent.
The local currency was little changed at 81.01 yen from 80.98 yen yesterday and increased to 61.24 euro cents from 61.10 cents. It traded at 51.37 British pence from 51.31 pence yesterday.