NZ dollar falls to 3-week low against pound as Carney sees less need for stimulus
By Jonathan Underhill
June 29 (BusinessDesk) - The New Zealand dollar fell to a three-week low against the pound after Bank of England governor Mark Carney signalled it may be necessary to remove some of the bank's monetary stimulus, suggesting interest rates could be raised as British economic growth picks up.
The kiwi dropped to 56.50 British pence as at 8am in Wellington, and earlier touched 56.16 pence, from 56.77 pence late yesterday. It traded at 73.09 US cents, up from 72.76 cents yesterday.
Carney told a European Central Bank conference in Portugal that "some removal of monetary stimulus is likely to become necessary" with a return to more conventional policy decisions. The comments come after the BoE's policy committee was split this month on whether to begin raising interest rates from a record-low 0.25 percent, with those voting to stay put pipping the rate hikers by five to three. The kiwi recovered some ground against the euro after the ECB indicated president Mario Draghi hadn't intended to send any hawkish signals to the market in his comments in Portugal.
"Markets are sensing a coordinated
effort by central bank heads to give the message that global
monetary policy is close to an inflexion point and economies
can handle some removal of monetary accommodation," said
Jason Wong, currency strategist at Bank of New Zealand, in a
note. "The market isn’t confident that a (UK) hike will
come as soon as the next meeting in August, but OIS pricing
moved to a better than even chance of a hike
The kiwi rose to 64.19 euro cents from 64.11 cents late yesterday, having earlier tumbled against the regional bloc's currency after Draghi hinted the ECB might start winding down its stimulus.
On the domestic front, investors will be watching for ANZ Bank New Zealand's business outlook survey today and building consents data tomorrow.
The trade-weighted index rose to 78.38 from 78.21. The local currency slipped to 95.58 Australian cents from 95.72 cents late yesterday and rose to 82.06 yen from 81.59 yen. The kiwi gained to 4.9672 yuan from 4.9487 yuan.