NZ dollar higher but rangebound ahead of Jackson Hole

Monday 21st August 2017

The New Zealand dollar was slightly higher in a quiet start to the week as investors look ahead to a meeting of the world's central bankers in Jackson Hole, Wyoming later this week.

The kiwi traded at 73.16 US cents as at 5pm in Wellington from 73.11 as at 8:30 am and from 73.12 cents in New York on Friday. The trade-weighted index was at 77.05 from 76.99 in New York.

It was a "very quiet start to the week with little data of consequence out today and early in the week. The focus is on the Kansas City Fed Jackson Hole symposium later in the week," said Jason Wong, currency strategist at Bank of New Zealand. The kiwi is likely to stick to a tight range until then. Investors are particularly keen to hear from Federal Reserve Chair Janet Yellen and European Central Bank president Mario Draghi.

On the domestic front, markets overlooked news that United Future leader Peter Dunne won't contest next month's election, making him the third leader to quit this month in a campaign that's been transformed by the rise of Labour leader Jacinda Ardern.

"New Zealand political developments are of little market interest at this juncture," said Wong.

The outcome of the election is now less certain, with recent polls showing a narrow gap between the governing National Party and the opposition Labour Party in the wake of Ardern assuming the leadership.

However, Bank of New Zealand senior economist Craig Ebert said international investors "tend to be more concerned about big lurches to the left or right, rather than leanings to the centre-left or centre-right. So the range of likely outcomes still limits the potential degree of market reaction, to our mind."

The kiwi traded at 62.25 euro cents from 62.12 cents on Friday in New York. It was at 56.81 British pence from 56.80 British pence and traded at 4.8798 yuan from 4.8758 yuan. The local currency was at 92.30 Australian cents from 92.25 cents and at 79.89 yen from 79.92 yen.

New Zealand's two-year swap rate rose 1 basis point tot 2.17 percent while 10-year swaps rose 2 basis points to 3.14 percent.

(BusinessDesk)

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