By Rebecca Howard
June 25 (BusinessDesk) - The New Zealand dollar firmed against the greenback as markets continue to expect the US
Federal Reserve to cut interest rates.
The kiwi was trading at 66.16 at 8am versus 65.98 US cents at 5pm in Wellington. The trade-weighted index was at 72.20
from 72.08.
The US dollar continued to lose ground on rising expectations that US Federal Reserve will move to cut interest rates,
OMF treasury manager Stuart Ive said. US President Donald Trump once again took to Twitter to criticise the central
bank, adding to the pressure. "Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!" Trump said.
The kiwi also got a lift on a slight shift in expectations on domestic interest rate cuts, said Mike Shirley, a dealer
at Kiwibank. Early yesterday, the market was pricing a more than 80 percent chance of a New Zealand rate cut in August -
that has dropped to around 70 percent, he said, which is helping support the New Zealand dollar.
The move came after a speech by Reserve Bank of Australia governor Philip Lowe, which was viewed as less dovish as he
said easing is unlikely to be as effective in the past. If Australia doesn't cut rates further or by as much then there
is less pressure on New Zealand to follow suit.
The kiwi was trading at 95.03 Australian cents from 94.85 Australian cents.
ANZ FX/rates strategist Sandeep Parekh said markets will now be watching for a speech by US Federal Reserve Chair Jerome
Powell tomorrow on the "economic outlook and monetary policy review" and then the Reserve Bank of New Zealand's cash
rate decision. All 20 economists surveyed by Bloomberg expect the official cash rate to stay on hold at 1.50 percent but
the short statement will be closely scrutinised for any clues on whether the bank is planning to ease further.
The New Zealand dollar was trading at 51.93 British pence from 51.74 British pence, at 58.06 euro cents from 58, at
70.97 yen from 70.90, and at 4.5458 Chinese yuan from 4.5382.
(BusinessDesk)
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