NZ dollar at bottom of range as ECB forum awaited
NZ dollar at bottom of range as ECB forum awaited; US, UK holidays thin volumes
By Paul McBeth
May. 26 (BusinessDesk) - The New Zealand dollar held near the bottom of its recent band ahead of the European Central Bank forum which may give investors clues to how the monetary authority will stave off threats to the regional economy. Holidays in the US and UK are likely to keep trading volumes light, traders said.
The kiwi traded at,85.33 US cents 5pm in
Wellington from 85.36 cents at 8am and 85.39 cents on Friday
in New York. The trade-weighted index was 79.73 from 79.78
at the Friday close.
ECB president Mario Draghi opened
the three-day conference near Lisbon, and traders are
looking for any clues as to how the central bank will
overcome low inflation and whether the bank will ease
monetary policy further through a series of stimulus
measures.,Memorial Day in the US and a bank holiday in the
UK means trading desks in New York and London will be closed
on Monday, reducing liquidity and opening up potential for a
volatile session.
"The ECB speakers have started off
fairly dovish" and "there's still more ECB rhetoric to
come," said Alex Hill, head of trading at HiFX in Auckland.
"The euro is under pressure, which is keeping the US dollar
bid firmly and commodity currencies down."
HiFX's Hill
said the lack of liquidity in the market means traders could
push the kiwi around in the Northern Hemisphere session. The
kiwi is trading about 20 basis points above a strong support
level, he said.
A,BusinessDesk survey of 10 traders
and strategists predicts the local currency may trade
between 84.30 US cents and 86.50 cents this week. Seven
predict the kiwi will fall this week, while three expect it
to increase.
The board of Fonterra Cooperative Group
is expected to cut its forecast payout to farmers after
several months of declining dairy prices, something the
Reserve Bank governor Graeme Wheeler has signalled should
lead to a drop in the kiwi dollar.
The local currency
traded at 86.98 yen at 5pm in Wellington from 87.06 yen on
Friday in New York, and was little changed at 92.37
Australian cents from 92.44 cents. It traded at 62.66 euro
cents from 62.63 cents last week, and,was at 50.69 British
pence from 50.73 pence.
(BusinessDesk)