NZ dollar trades near two-week low in week of Fed, RBNZ, Fonterra, milk auction
By Jonathan Underhill
March 19 (BusinessDesk) - The New Zealand dollar was little changed near a two-week low in a busy week for potentially market-moving events, including a likely rate hike from the Federal Reserve, the local Reserve Bank's policy review, Fonterra Cooperative Group's interim results and the latest dairy auction.
The kiwi dollar traded at 72.19 US cents as at 8am in Wellington from 72.15 cents in New York on Friday. The trade-weighted index was at 74.30 from 74.28.
The Fed’s new chairman Jerome Powell is expected to raise the fed funds rate a quarter point to a range of 1.50 percent to 1.75 percent this week, with the market putting odds of a move at 95 percent, and traders will be watching closely for pointers on the pace of hikes through the next 12 months, with at least two more expected. By contrast, Reserve Bank acting governor Grant Spencer is widely expected to keep rates unchanged with only a gradual pace of increases signalled in his review before handing over to Adrian Orr.
"For the week ahead, the FOMC meeting on Thursday morning NZ time holds the most
interest, with attention on the new set of projections and how Powell handles the press conference," said Jason Wong, currency strategist at Bank of New Zealand. "The RBNZ’s OCR Review follows two hours after the FOMC statement and should pass with little market reaction, with the market more interested in NZ monetary policy matters when the new governor’s term begins."
The only local event on the calendar today is the performance of services index for February, expected to show activity is still expanding. The GlobalDairyTrade auction on Tuesday night follows two consecutive declines in the GDT price index and Fonterra's results on Wednesday is likely to include the cost of its $183 million settlement with Danone and potentially a writedown of its 18.8 percent investment in Chinese distributor Beingmate.
The kiwi dollar traded at 51.76 British pence from 51.80 pence on Friday in New York at the start of a week that may see further details of Brexit emerge from an EU summit and with the Bank of England scheduled to meet. It traded at 58.73 euro cents from 58.78 cents.
The kiwi was little changed at 93.49 Australian cents from 93.46 cents and fell to 4.5690 yuan from 4.5709 yuan. It declined to 76.40 yen from 76.61 yen.