NZ dollar steady as investors await Reserve Bank interest rate decision on Thursday
By Tina Morrison
July 21 (BusinessDesk) - The New Zealand dollar is in for a quiet start to the week as traders look ahead to the looming Reserve Bank decision on interest rates on Thursday where a hike is expected.
The kiwi traded at 86.85 US cents at 8am in Wellington, from 86.97 cents at the New York close and 86.77 cents at 5pm in Wellington on Friday. The trade-weighted index was little changed at 80.86 from 80.84 on Friday.
Reserve Bank governor Graeme Wheeler is expected to hike the official cash rate for the fourth time this year, taking the benchmark to 3.5 percent. The higher interest rates available in New Zealand, along with its stable government and strong credit rating, has lured overseas investors and pushed up the local currency 6 percent so far this year. Still, weaker commodity prices and benign inflation may prompt the central bank to pause until December after this month's hike, economists say.
"Domestically, this week will be all about Thursday's RBNZ meeting," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. "The market currently prices around an 85 percent chance of a 25 basis point hike at the meeting."
BNZ's Martin said the currency has support at 86.50 US cents in a quiet start to the week.
Today, net migration data for June will be released at 10:45am. The Reserve Bank has been tracking migration data closely in anticipation a recent surge in net migration should taper off soon, Martin said. In May, the country added a net 3,980 migrants.
At 3pm, credit card spending and balance data for June will be published by the Reserve Bank.
The New Zealand dollar slipped to 92.45 Australian cents from 92.67 cents on Friday ahead of a speech by Reserve Bank of Australia governor Glenn Stevens to the Anika Foundation in Sydney tomorrow, which is open to media. Australia publishes inflation data for June on Wednesday.
The kiwi was little changed at 64.17 euro cents from 64.15 cents on Friday, and gained to 50.81 British pence from 50.72 pence.
The local currency advanced to 88.01 yen from 87.92 yen on Friday. Japanese banks are closed today in observance of Marine Day.