NZ dollar little changed as RBNZ rate review looms
By Paul McBeth
Sept. 10 (BusinessDesk) - The New Zealand dollar was little changed near a six-month low ahead of tomorrow's Reserve Bank policy review, where governor Graeme Wheeler is expected to keep the key rate on hold as he assesses the impact of his tightening this year.
The kiwi traded at 82.38 US cents at 5pm in Wellington from 82.44 cents at 8am, down from82.57 cents yesterday. The trade-weighted index was at 78.86 from 78.93 yesterday.
Wheeler will keep the official cash rate 3.5 percent tomorrow, according to a Reuters poll of economists, having signalled a pause in rate hikes at the July review as inflation is tamer than expected and commodity prices continue to fall from earlier highs. Traders will be watching for any attempts to jawbone the currency lower after Wheeler heightened his rhetoric in July, calling the kiwi "unjustifiably" high, a requirement for the bank to intervene, and amid speculation the central bank sold New Zealand dollars on market earlier this month.
"Everybody's pacing until Wheeler tomorrow - ANZ's expecting quite a neutral statement and for Wheeler to reiterate concerns about the currency," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. The kiwi has had a "fairly steady grind lower and tomorrow should reiterate that, and continue that trend."
The kiwi rose to a two-week high 90.01 Australian cents, and traded at 89.88 cents at 5pm in Wellington from 89.20 cents yesterday after a consumer confidence sank in September in a Melbourne Institute/Westpac Banking Corp survey, a day after a National Australia Bank report showing a decline in business sentiment.
ANZ's Tuck said the Australian dollar had broken below its 200-day moving average, a key technical level, against the greenback, which supported the kiwi dollar on the cross-rate, which still has demand from investors seeking higher yields.
The local currency was unchanged at 87.73 yen at 5pm in Wellington from yesterday and fell to 63.73 euro cents from 64.12 cents. It declined to 51.12 British pence from 51.37 pence yesterday.