NZ dollar treads water as investors await Fed speakers

Tuesday 27th November 2018

The New Zealand dollar was largely unchanged as US markets reopened on a positive note as investors await speeches from Federal Reserve officials after cautious comments on the US rate outlook earlier this month.

The kiwi was at 67.84 US cents as at 8am, unchanged from afternoon trading yesterday. The trade-weighted index was at 74.17 from 74.10.

Stocks on Wall Street gained after US markets reopened from the Thanksgiving-shortened week with the Dow Jones Industrial Average up 1.2 percent in late trading. Speeches from Fed vice chair Richard Clarida and chair Jerome Powell will be closely watched this week after Clarida was more cautious about the growth outlook earlier this month. That stoked speculation the central bank may pause its rate hike cycle as soon as March. The yield on 10-year Treasuries rose one basis point to 3.07 percent.

A meeting between US President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 leaders' summit at the end of the week is also keenly awaited in the hopes it may unwind some of the tension between the world's two biggest economies.

"Currency moves have been modest as we await a barrage of Fed-speak over the remainder of the week and the Trump-Xi meeting at the G20 on the weekend," Bank of New Zealand interest rate strategist Nick Smyth said in a note.

Weaker than expected retail sales data yesterday had a brief impact on the kiwi dollar, which Smyth said is close to where it ended last week.

Local data today include October merchandise trade figures. The Reserve Bank will release its financial stability report tomorrow and is expected to announce a loosening of its high loan-to-value ratio lending restrictions.

The kiwi traded at 59.87 euro cents from 59.82 cents yesterday after the Italian government was reported to be considering a lower budget deficit after it was rebuked by the European Commission for its original proposal. The kiwi traded at 52.91 British pence from 52.94 pence yesterday and rose to 77.02 yen from 76.80 yen.

The local currency increased to 93.86 Australian cents from 93.66 cents yesterday and decreased to 4.7086 Chinese yuan from 4.7119 yuan.

(BusinessDesk)

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