Monday 19th August 2019 |
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The New Zealand dollar drifted lower despite a mildly positive tone to sentiment once Asian trading kicked in.
The kiwi was trading at 64.17 US cents at 5pm in Wellington from 64.31 cents at 8am. The trade-weighted index was at 71.38 points from 71.54.
“There are no real drivers," says Mike Shirley, a dealer at Kiwibank. "The kiwi seems to be adrift. In fact, everything looks to be adrift” until the end of the week, he says.
The Federal Reserve hosts its annual shindig for central bankers at Jackson Hole in Wyoming later this week. Chair Jerome Powell’s speech on Friday is eagerly awaited to see whether he will stick to the characterisation of last month’s rate cut, the first since the GFC, as a kind of insurance policy to keep the US economy growing, or whether it was the start of a serious bout of rate-cutting.
It’s highly unusual for any central bank to move key rates in either direction just once.
The market appeared to shrug off positive news over the weekend that Germany is likely to loosen the fiscal purse-strings for some infrastructure spending. The People’s Bank of China also announced a key interest rate reform that will lower corporate borrowing costs.
The market also shrugged off a leaked British government memo outlining the chaos a no-deal Brexit would wreak on everything from the cost of food to the availability of medicines and cause severe disruption to ports.
Newly minted British Prime Minister Boris Johnson is a leading Brexit supporter and has promised to get the country out of the European Union during his first 100 days in office. Other parliamentarians are plotting ways to block a no-deal exit.
Shirley says the market has also shrugged off the “head in the sand stuff” coming from US officials over the weekend denying that there are any signs of a recession hitting the world’s largest economy.
“The market seems to have ignored all of that, so far at least, and is just drifting." The market remains vulnerable to headlines and tweets, he added.
The New Zealand dollar was trading at 94.60 Australian cents from 94.64, at 52.78 British pence from 52.93, at 57.85 euro cents from 58.00, at 68.25 yen from 68.48 and at 4.5216 Chinese yuan from 4.5297.
Wholesale interest rates bounced off their record lows. The New Zealand two-year swap rate edged up to a bid price of 0.9350 percent from Friday’s close at 0.9156 and the 10-year swap rate rose to 1.2225 percent from 1.1750.
(BusinessDesk)
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