Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ dollar eases after short-lived technical rally

NZ dollar eases after short-lived technical rally

By Jenny Ruth

Sept. 25 (BusinessDesk) - The New Zealand dollar was slightly weaker against the US dollar despite spiking on less-dovish-than-expected commentary when the Reserve Bank's monetary policy committee held the official cash rate steady.

The kiwi was trading at 63.22 US cents at 5pm in Wellington, down from the day's high at 63.48 cents and from 63.27 cents at 8am. The trade-weighted index was at 70.44 from 70.39.

The short-lived mid-afternoon rally "was predominantly due to the unwinding of pricing for a cut," says Mike Shirley, a dealer at Kiwibank.

Ahead of the 2pm announcement, pricing suggested a 14-15 percent chance of a cut, mainly from those hoping for a surprise after the early August "50 points out of nowhere double-whammy," Shirley says. That took the OCR from 1.5 percent to 1 percent.

Instead of a surprise, today's statement was "stock standard" and very much as most had expected.

Australia's Reserve Bank governor Philip Lowe also disappointed with his speech yesterday evening.

"He certainly left the door ajar, but the market was looking for an increased level of certainty, not something explicit but certainly leaning towards another cut in October," Shirley said.

Nevertheless, Lowe did say that falling global interest rates meant that if the RBA didn't follow suit and cut its cash rate, the Australian dollar would rise, hurting the domestic economy.

Likewise, even though the RBNZ ruled out an OCR cut today, it still sees "scope for more fiscal and monetary stimulus, if necessary, to support the economy and maintain our inflation and employment objectives."

The political crisis in the United States, where the Democrat-led House of Representatives has just opened a formal impeachment inquiry into President Donald Trump, may also be weighing on the US dollar.

"It feels like financial markets are sitting on the sidelines with that one. It hasn't really gotten a lot of traction in currency markets," Shirley says.

The market still has a number of other things to worry about, including the US-China trade war and British Prime Minister Boris Johnson's Brexit plans being blown out of the water by that country's Supreme Court.

The tensions in the Middle East are another of those worries, although oil prices have receded after last week's spike.

"Nothing's really been resolved – none of those things have fundamentally changed and it's all still milling around in the background," Shirley says.

"It makes it hard to pick the next big thing."

The kiwi was at 93.20 Australian cents from 93.04, at 50.70 British pence from 50.64, at 57.49 euro cents from 57.43, at 67.86 yen from 67.71 and at 4.5008 Chinese yuan from 4.5009.

The two-year swap rate nudged up to a bid price of 0.9398 percent from 0.9288 yesterday while 10-year swaps fell to 1.2000 percent from 1.2325.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Forest And Bird: Misinformation Circulating On Biodiversity Policy

Forest & Bird is concerned at misinformation circulating regarding a policy statement aimed at protecting New Zealand’s unique biodiversity. The National Policy Statement for Indigenous Biodiversity is being consulted on by the ... More>>

ALSO:

NIWA: Scientists Say Methane Emitted By Humans ‘vastly Underestimated’

NIWA researchers have helped unlock information trapped in ancient air samples from Greenland and Antarctica that shows the amount of methane humans are emitting into the atmosphere from fossil fuels has been vastly underestimated... More>>

ALSO:

SMC Expert Reaction: Record Dry Spells And Effects On Forests

With no rain forecast before Sunday, Auckland is about to break a record for the city's longest dry spell. Niwa says Auckland is likely to hit 40 consecutive days without rain this weekend . The upper North Island is seeing severe meterological ... More>>

ALSO:



Reserve Bank: Official Cash Rate Remains At 1.0 Percent

The Monetary Policy Committee has decided to keep the Official Cash Rate (OCR) at 1.0 percent. Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2 percent mid-point of our target range. ... More>>

ALSO:

Science Media Centre: Novel Coronavirus Detected In China – Expert Reaction

The virus was detected after more than 40 people were hospitalised with pneumonia in Wuhan City, China and the outbreak traced to a large animal and seafood market. The Centers for Disease Control and Prevention reports that person-to-person transmission ... More>>

ALSO:

NZ First: Launch Of Parliament Petition To Remove Aluminium Dross

This afternoon to a crowd of over 100 people in Mataura -- Mark Patterson, New Zealand First List MP based in Clutha-Southland launched a parliamentary petition regarding the aluminium dross issue in Mataura, Southland. The petition asks that the House ... More>>

ALSO: