NZ dollar holds gains after Chinese CPI as traders look ahead to MPS
Feb. 14 (BusinessDesk) – The New Zealand dollar held its gains after Chinese inflation data came in near expectations and traders warmed to the kiwi’s fundamentals ahead of what’s expected to be an interest rate hike by the Reserve Bank next month.
The kiwi traded at 83.36 US cents, down from 83.52 cents at 8am in Wellington and up from 83.11 cents yesterday. The trade-weighted index was unchanged from yesterday at 78.28.
Consumer prices in China rose 2.5 percent in January from a year earlier, just above the 2.4 percent pace forecast in a Bloomberg survey but not enough to prompt economists to revise their take on the biggest market for New Zealand and Australia. At home, the Reserve Bank releases its monetary policy statement on March 13 and is expected to hike the official cash rate by a quarter point to 2.75 percent
“The kiwi has got a modest upward bias,” said Imre Speizer, senior market strategist at Westpac Banking Corp. “It’s not a screaming buy but clearly there is a good, positive backdrop in New Zealand.”
He said the kiwi “could have a go at punching above 84 US cents in the next week or so and if it does, the currency could reach 86 cents around the time of the MPS next month.
“Any moves until then will be from offshore,” he said, adding that a rate hike by the Reserve Bank was “largely priced in.”
The New Zealand dollar traded at 92.69 Australian cents, down from 92.89 cents yesterday. The kiwi advanced to 50.05 British pence from 49.98 pence.
The kiwi was little changed at 60.94 euro cents from 61.01 cents yesterday and was little changed at 84.82 yen.