NZ dollar treading water ahead of ECB meeting

By Rebecca Howard

Sept. 11 (BusinessDesk) - The New Zealand dollar was largely range-bound against the euro as markets await the European Central Bank meeting later in the global trading day.

The kiwi was trading at 58.14 euro cents at 8am in Wellington from 58.21 euro cents at 5pm and at 64.19 US cents from 64.31 cents.

The ECB is due to meet overnight and is expected to cut interest rates deeper into negative territory and possibly restart asset purchases.

Trading was fairly muted as "ahead of the ECB meeting on Thursday, there wasn’t a lot of economic news for financial markets to trade off," said ANZ Bank economist Michael Callaghan.

According to Reuters, ECB policymakers are leaning toward a stimulus package that includes a rate cut, a beefed-up pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates.

Callaghan said the kiwi has support at 57.40 euro cents and faces resistance at 58.40 euro cents.

While "market sentiment and trade developments" will be the key focus for markets in the short-term, Callaghan said attention will start to shift to next week's second-quarter gross domestic product data in New Zealand. The central bank is expecting the economy to have expanded 0.5 percent in the June quarter. Anything below that will add to the view there are more rate cuts on the immediate horizon.

The kiwi was trading at 51.98 British pence from 52.11 British pence. According to Callaghan, sterling was a touch stronger as UK wage and unemployment data beat estimates.

"With UK political tensions elevated, Brexit will remain the key driver for this pair in the near-term."

The trade-weighted index was unchanged at 71.33 points. The kiwi was trading at 93.57 Australian cents from 93.77, at 69.02 yen from 69.06 and at 4.5660 Chinese yuan from 4.5756.

(BusinessDesk)

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