NZ dollar holds steady as conflicting forces vie for attention

Wednesday 18th May 2016

The New Zealand dollar held steady as traders weighed a more positive local outlook against signs of improvement in the US economy.

The kiwi was little changed at 68.10 US cents at 8am in Wellington, from 68.07 cents at 5pm yesterday. The trade-weighted index edged up to 72.82 from 72.67.

The local currency was caught between conflicting forces overnight. Positive news supporting the kiwi included the minutes of the Reserve Bank of Australia's May 4 meeting when it cut interest rates, which showed officials were somewhat torn between cutting at that meeting or June, suggesting a June reduction is now unlikely. A 3 percent lift in whole milk powder prices at the GlobalDairyTrade auction overnight was also supportive for kiwi, boosting sentiment for New Zealand's key dairy export product. Countering those factors, the greenback was in favour after US consumer prices recorded their biggest increase in more than three years in April.

"The US dollar got some support and the kiwi and Aussie also got some support from their own local things," said Imre Speizer, Westpac Banking Corp New Zealand senior market strategist. "Those cancelled out so that's why kiwi didn't make much more of a gain overnight."

In New Zealand today, first-quarter producer prices data are released at 10:45am and Reserve Bank governor Graeme Wheeler is speaking to the Institute of Directors in Hamilton at midday.

The New Zealand dollar gained to 92.85 Australian cents from 92.50 cents, edged up to 47.10 British pence from 47.01 pence, and gained to 74.28 yen from 74.16 yen. It was little changed at 60.17 euro cents from 60.14, and increased to 4.4381 yuan from 4.4361 yuan.

BusinessDesk.co.nz

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