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NZD headed for 0.6% weekly gain against greenback

NZD headed for 0.6% weekly gain against greenback


By Rebecca Howard

March 22 (BusinessDesk) - The New Zealand dollar is headed for a 0.6 percent weekly gain after getting a lift from a more dovish US Federal Reserve and solid fourth-quarter domestic growth data.

The kiwi traded at 68.86 US cents at 5pm in Wellington from 68.72 at 8am and 68.43 late in New York last Friday. The trade-weighted index was at 74.50 from 74.36.

The kiwi got a lift when the Fed held interest rates steady at 2.25- 2.50 percent this week and signalled no further interest rate hikes this year.

"The Fed was arguably more dovish than the market was expecting," said Mark Johnson, private client manager at OMF.

That was followed by news that the domestic economy grew 0.6 percent in the fourth quarter. While that was below the 0.8 percent tipped by the central bank, it was in line with economists' expectations.

"While it came in as expected, the market was probably positioned short kiwi going into that," Johnson said.

The greenback then rallied on some better-than-expected US data.

Attention has now shifted to next week's RBNZ monetary policy review, with a decision due Wednesday at 2pm. The central bank is widely expected to keep rates on hold at a record low 1.75 percent and reiterate that the next move could be up or down.

But economists remain split on whether or not a cut is actually on the cards. Market pricing shows there is a 68 percent chance of a cut in November and the statement will be closely scrutinized for any clues as to whether the bank would move to lower the official cash rate at some point.

Until next Wednesday "we are back in a bit of a holding pattern," said Johnson.

Brexit ructions will also continue to garner the markets' interest. EU leaders said Britain could leave the European Union without a deal on April 12 if lawmakers fail next week to back Prime Minister Theresa May’s agreement with Brussels, Reuters reported. However, they gave May an extra two months, until May 22, to leave if she wins next week’s vote in parliament.

The kiwi traded at 52.40 British pence from 52.56 at 8am. The New Zealand dollar was trading at 96.90 Australian cents from 96.69, at 60.53 euro cents from 60.51, at 76.29 yen from 76.12 and at 4.6158 Chinese yuan from 4.6003.

(BusinessDesk

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