NZD stalled ahead of RBNZ statement; global outlook weakens

By Gavin Evans

March 25 (BusinessDesk) - The New Zealand dollar opened marginally softer with weak economic data in Europe and the US late last week insufficient to move the currency ahead of the Reserve Bank’s monetary policy announcement on Wednesday.

The kiwi traded at 68.73 US cents at 8:30 am, from 68.75 cents in New York Friday and 68.86 in Wellington late Friday. The trade-weighted index was at 74.49 from 74.50.

The S&P500 Index fell 1.9 percent Friday, its worst performance since January, on weak manufacturing data and after the yield on 10-year treasuries fell below that on three-month bills – a signal of weak growth expectations.

US manufacturing activity fell to a 21-month low in March, according to the IHS Markit purchasing managers index.

European markets also fell amid renewed Brexit uncertainty and after the IHS Market PMI showed manufacturing in Germany contracted for a third straight month. The FTSE100 fell 2 percent.

BNZ said the kiwi was a bystander to the events on Friday, which had reversed much of the improved sentiment that flowed the US Federal Reserve’s signal last week for no rate increases before 2020.

“Markets moved into risk-off mode on Friday, after a much weaker German PMI survey increased concerns about the global economy. US equities were down sharply, more than reversing the gains seen in wake of the dovish FOMC meeting on Wednesday night.”

ANZ said the weaker US dollar will keep the local currency supported at 68.30 US cents and the focus will move to the RBNZ rate setting on Wednesday. It sees resistance at 69.25 US cents

With no near-term local data, XE says attention for the kiwi will be focused on the latter part of the week.

“The NZD direction will be dictated by Wednesday’s RBNZ MPS ahead of Thursday’s business confidence data release and RBNZ governor Adrian Orr’s speech on the future of New Zealand’s monetary policy framework due for release on Friday morning.”

The kiwi traded at 97.08 Australian cents, from 96.90 here on Friday. It was at 51.95 British pence from 52.40, at 60.82 euro cents from 60.53, at 75.47 yen from 76.29 and at 4.6160 Chinese yuan from 4.6158.

(BusinessDesk)

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