NZ dollar falls as market digests Robertson comments on RBNZ, awaits new Fed chair
By Jonathan Underhill
Oct. 30 (BusinessDesk) - The New Zealand dollar fell as traders digested comments from Finance Minister Grant Robertson
that the Reserve Bank's mandate will be widened, while offshore, the announcement of the new Federal Reserve chair is
keenly awaited.
The kiwi fell to 68.58 US cents as at 5pm in Wellington from 68.79 cents in New York on Friday. The trade-weighted index
fell to 72.78 from 73.12 at the end of last week.
New Finance Minister Robertson told Television New Zealand's Q+A show yesterday that the Reserve Bank will need to
consider "other goals in the economy, such as making sure that we maximise employment" as well as price stability when
making monetary policy decisions, which could see it tolerating more inflation. Meanwhile, the Wall Street Journal
reported that US President Donald Trump is likely to announce Federal Reserve governor Jerome Powell as his nominee to
be the next chairman, a more dovish choice than another reported contender, Stanford economist John Taylor.
"Selling kiwi tends to be flavour of the month," said Tim Kelleher, head of institutional foreign exchange sales at ASB
Bank. Roberston's talk of the Reserve Bank's mandate "could mean lower rates" although should Trump name Powell as the
next Fed chair, "there is a risk of a US dollar selloff," he said.
Equity markets had weakened in Asia and that was also weighing on the kiwi dollar, Kelleher said. "It's going to be on
the back foot for a while."
Traders are looking ahead this week to the release of third-quarter labour market data on Wednesday, Nov. 1. Ahead of
that, reports on building consents for September and business confidence for October are due out tomorrow. The labour
market figures are expected to show the jobless rate held unchanged at 4.8 percent while employment grew 0.8 percent
after an unexpected 0.1 percent drop in the second quarter.
Growth in private sector wages probably accelerated to 0.7 percent in the third quarter from 0.4 percent three months
earlier, economists said. Adding to a busy week globally are interest rate decisions from the Bank of Japan, the Fed and
the Bank of England, with only the BoE expected to hike, while US payrolls round out the week. They may show jobs came
roaring back this month, with growth of 310,000 expected after a hurricane-induced 33,000 decline in September.
The kiwi traded at 52.12 British pence from 52.25 pence on Friday in New York and slipped to 58.96 euro cents from 59.09
cents. It fell to 89.17 Australian cents from 89.32 cents, fell to 4.5506 yuan from 4.5611 yuan and slipped to 77.79 yen
from 78 yen.
New Zealand's two-year swap rate fell 1 basis point to 2.15 percent and 10-year swaps dropped 5 basis points to 3.19
percent.
(BusinessDesk)