Wednesday 27 July 2016 08:35 AM
NZ dollar little changed as investors await central bank meetings, Australian inflation
By Paul McBeth
July 27 (BusinessDesk) - The New Zealand dollar was little changed as investors await central bank meetings in the US
and Japan this week, and ahead of Australian inflation data today which is seen as a key factor in whether rates will go
lower across the Tasman.
The kiwi traded at 70.49 US cents at 8am in Wellington, the same level from 5pm yesterday. The trade-weighted index was
little changed at 75.55 from 75.51 yesterday.
The Federal Reserve and Bank of Japan will review policy this week, with investors expecting to see more optimism from
the Fed and a bigger stimulus package in Japan. In the meantime, Australia's consumer price index out today is seen as
the final piece of data that may prompt the Reserve Bank of Australia to cut the target cash rate to 1.5 percent when it
meets next week. Traders have priced in a 66 percent chance the RBA will lower rates next week.
"The RBA moved to an explicit easing bias in July tied to inflationary, labour and housing market dynamics. Today’s
second quarter CPI remains critical to whether or not it will ease further next week," ANZ Bank New Zealand agri
economist Con Williams said in a note. "Expect support for the NZD to be maintained, particularly if the Australian Q2
CPI release fails to meet expectations."
The kiwi dollar has retraced some of its recent losses over the past week and investors will be watching the draft
unitary plan for Auckland to see whether the local authority will make it easier to increase the housing supply in New
Zealand's biggest city. The lack of supply came at the same time migration reached record highs and underpinned rising
house prices in recent years, making it difficult for New Zealand's Reserve Bank to cut interest rates to stoke moribund
inflation for fear of fuelling demand for property.
The local currency was little changed at 73.73 yen from 73.62 yen yesterday and dipped to 4.6996 Chinese yuan from
4.7083 yuan. It traded at 53.62 British pence from 53.76 pence yesterday and was little changed at 64.13 euro cents from
64.07 cents.
(BusinessDesk)
ends