Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search


NZD falls to 4-week low as November cuts seem locked in

Monday 26 September 2016 05:18 PM

NZ dollar falls to 4-week low as November cuts seem locked in, trade data weakens

By Jonathan Underhill

Sept. 26 (BusinessDesk) - The New Zealand dollar fell to a four-week low on growing expectations the Reserve Bank will cut the official cash rate in November and after government figures showed the biggest monthly trade deficit in two years.

The kiwi was trading at 72.39 US cents as at 5pm in Wellington, having touched 72.22 cents in late New York trading on Friday, the lowest since Aug. 31 and down from 72.74 cents in Wellington at the end of last week. The trade-weighted index declined to 76.93 from 77.20 on Friday.

New Zealand recorded a trade deficit of $1.27 billion in August as dairy and meat led an 8.7 percent drop in exports. Still, imports of vehicles and parts climbed 13 percent, in a sign demand is still relatively robust in the domestic economy. Last Thursday, RBNZ governor Wheeler kept the OCR at 2 percent, saying more easing was on the cards to get inflation back within the target band of 1-to-3 percent. Traders are pricing in a 75 percent chance of a quarter-point cut in the OCR to 1.75 percent in November, up from 56 percent before Thursday’s OCR review.

"The kiwi has continued on from its fall last week. The next rate cut is going to be in November, it would be a huge shock if it doesn't happen," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. The trade balance "was pretty ugly" with the weak dairy exports although "there's a lot of seasonality" in the data and the car imports "indicates signs of domestic strength," he said.

Financial markets are now awaiting the first debate of the US presidential race tomorrow between Hillary Clinton and Donald Trump and Kelleher indicated it was possible investors would become more risk averse "if you start to see Hillary being undermined." Citibank has raised the odds of a Trump win to 40 percent from 35 percent.

"It could be like Brexit - no-one expected it to happen and then it did," he said.

The kiwi declined to 4.8263 Chinese yuan from 4.8317 yuan on Friday in New York and slipped to 64.44 euro cents from 64.50 cents. It dipped to 55.75 British pence from 55.84 pence and fell to 73.01 yen from 73.18 yen. The kiwi was little changed at 94.94 Australian cents from 94.96 cents.

New Zealand's two-year swap rate fell 3 basis points to 1.97 percent, and 10-year swaps dropped 4 basis points to 2.46 percent.


© Scoop Media

Top Scoops Headlines


Fatuous Defence: Australia’s Guided Missile Plans

Even in times of pandemic crises, some things never change. While Australia gurgles and bumbles slowly with its COVID-19 vaccine rollout, there are other priorities at stake. Threat inflators are receiving much interest in defence, and the media ... More>>

Richard S. Ehrlich: Cambodia's Hun Sen Feels Politically Vaccinated

BANGKOK, Thailand -- When Cambodian Prime Minister Hun Sen received his AstraZeneca vaccination shot, he suddenly felt invulnerable and vowed to rule indefinitely. Hun Sen is already one of the world's longest ruling prime ministers, confident his successor ... More>>

Reese Erlich: Foreign Correspondent: My Final Column?

I’m dying. It’s not easy to write these words. But it’s true. More>>

Binoy Kampmark: Brawling Over Vaccines: Export Bans And The EU’s Bungled Rollout
The European Union has been keeping up appearances in encouraging the equitable distribution of vaccines to combat SARS-CoV-2 and its disease, COVID-19. Numerous statements speak to the need to back the COVAX scheme, to ensure equity and that no one state misses out... More>>

Jennifer S. Hunt: Trump Evades Conviction Again As Republicans Opt For Self-Preservation

By Jennifer S. Hunt Lecturer in Security Studies, Australian National University Twice-impeached former US President Donald Trump has evaded conviction once more. On the fourth day of the impeachment trial, the Senate verdict is in . Voting guilty: ... More>>

Binoy Kampmark: Let The Investigation Begin: The International Criminal Court, Israel And The Palestinian Territories

International tribunals tend to be praised, in principle, by those they avoid investigating. Once interest shifts to those parties, such bodies become the subject of accusations: bias, politicisation, crude arbitrariness. The United States, whose legal and political ... More>>