NZ dollar little changed as focus shifts to global central banks

Monday 25th July 2016

The New Zealand dollar was little changed at the open of the week's trading as investors shifted their focus to central bank meetings in the US and Japan.

The kiwi traded at 69.89 US cents at 8am in Wellington from 69.97 cents on Friday in New York. The trade-weighted index was at 75.13 from 75.06 last week.

The local currency dropped 1.7 percent last week with the Reserve Bank signalling it will probably cut interest rates to stir inflation, which is being pushed down by the strong kiwi. Investors are now focused on what the major central banks will do, with the Federal Reserve and Bank of Japan reviewing policy this week.

With the US economy continuing to grow at a reasonable pace and company earnings tracking ahead of expectations, investors will be watching for the Fed to give a hint on when it will next hike interest rates, whereas the Bank of Japan is seen as expanding its quantitative easing programme. Australian inflation data will also be watched.

"The RBNZ dominated the headlines last week, but for the NZD it looks set to be a week of global focus, with the FOMC (Federal Open Market Committee) and BoJ meetings and Australian Q2 CPI the main events," ANZ Bank New Zealand senior economist Philip Borkin said in a note. "The RBNZ has knocked the NZD off its perch, but reasons for strength remain."

The kiwi edged down to 93.56 Australian cents from 93.65 cents on Friday in New York. Australia's second-quarter consumer price index is due for release on Wednesday ahead of the Reserve Bank of Australia's policy review next week.

The local currency traded at 74.23 yen from 74.20 yen last week and fell to 4.6652 Chinese yuan from 4.6705 yuan. It was little changed at 63.61 euro cents from 63.73 cents last week and decreased to 53.18 British pence from 53.36 pence.

BusinessDesk.co.nz

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