Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ dollar jumps vs. sterling after BoE dashes expectations

NZ dollar jumps to month high vs. sterling after BoE fails to signal monetary tightening

By Tina Morrison

May 15 (BusinessDesk) – The New Zealand dollar jumped to a one-month high against the British pound after the Bank of England dashed the hopes of some investors who had expected it to signal a tightening in monetary policy.

The kiwi touched 51.72 British pence early this morning, and was trading at 51.62 pence at 8am in Wellington, from 51.38 pence at 5pm yesterday. The local currency was little changed at 86.62 US cents from 86.60 cents yesterday.

The British pound was the weakest major currency overnight after BoE governor Mark Carney in the bank’s quarterly inflation report said Britain’s recovery was still in its early stages and there is enough slack in the economy to keep interest rates on hold for a while yet. That deflated the expectations of some investors who had bet the bank would raise rates in less than a year’s time.

“The Bank of England failed to boost expectations for monetary tightening,” Kathy Lien, managing director of foreign exchange strategy for BK Asset Management in New York, said in a note. “Going into the release of the quarterly inflation report, most investors were positioned for a more optimistic and hawkish outlook from the central bank. They were hoping that the BoE would signal plans to raise interest rates this year but the central bank refused to deliver.”

Investors are unwinding their “long” positions in the pound, where they had bet higher interest rates would strengthen the currency, Lien said.

The local highlight in New Zealand today is the annual government budget, delivered to parliament at 2pm by Finance Minister Bill English.

The budget is expected to highlight the strong local economy, and reiterate forecasts for a return to surplus next year, ANZ Bank New Zealand said in a note.

ANZ expects the kiwi to trade between 86.40 US cents and 87.20 cents today.

Traders will also be eyeing the BNZ-BusinessNZ PMI report for April, scheduled for release at 10:30am.

The New Zealand dollar advanced to 92.32 Australian cents from 92.14 cents yesterday. Reserve Bank of Australia head of financial stability Luci Ellis speaks to a housing conference at 11am New Zealand time today.

The kiwi was little changed at 63.13 euro cents from 63.14 cents yesterday ahead of the final reading of April European inflation tonight. The European Central Bank is preparing a package of policy options for its June 5 meeting including cuts in all its interest rates and targeted measures aimed at boosting lending to small and mid-sized firms, Reuters reported.

The local currency dropped to 88.20 yen from 88.45 yen yesterday while the trade-weighted index edged up to 80.52 from 80.47 yesterday.

Tonight, investors will be eyeing a speech by Federal Reserve chair Janet Yellen in Washington. In her testimony to Congress last week, Yellen pointed to an improving US economic outlook yet warned about risks such as the American housing sector.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: RBNZ Starts Talks On Tougher Rules For Property Speculators

The Reserve Bank of New Zealand is stepping up preparations to restrict lending to residential property investors as it watches house prices, particularly in Auckland, continue to rise strongly. More>>

ALSO:

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news