NZ dollar falls before Fed, RBNZ as RBA sees weaker currency
Oct. 29 (BusinessDesk) – The New Zealand dollar fell, closing in on a key support level, ahead of the Federal Reserve’s two-day policy meeting and after the Reserve Bank of Australia said its currency may be “materially lower” in future.
The kiwi fell to 82.67 US cents at 5pm from 83.03 cents at the start of the day and from 83.07 cents the previous day. The trade-weighted index fell to 76.22 from 76.37.
The Federal Open Market Committee is expected to maintain its bond buying stimulus programme when it surfaces after a two-day meeting on Wednesday in the US while economic data delayed by the budget shutdown may provide evidence the world’s biggest economy is struggling.
New Zealand’s central bank is expected to keep its official cash rate unchanged at 2.5 percent on Thursday, while in Australia, the media picked up on comments from governor Glenn Stevens today that at some point in the future “the Australian dollar will be materially lower than it is today.”
“The kiwi may find some support in the next couple of days,” said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong. “The risks to the US dollar are skewed to the downside.”
The kiwi may trade in a range of 82.50 US cents to 83 cents in the next 24 hours, she said. If US data prints stronger than expected, traders are likely to dismiss it as relating to “the pre-shutdown economy,” she said.
Media reports of the speech by the RBA’s Stevens had put a “negative spin” on his comments in what was actually a balanced presentation, Trinh said.
The kiwi dollar rose to 86.91 Australian cents from 86.64 cents at the start of the day and up from 86.44 cents in Asia yesterday. The local currency fell to 80.62 yen from 80.99 yen at the start of the day and slipped to 60.02 euro cents from 60.15 cents. It was little changed at 51.37 British pence.