NZ dollar falls

New Zealand dollar 2The New Zealand dollar has extended its decline on growing anticipation the Reserve Bank will take a more dovish tone and may adopt an even flatter interest rate track in this week’s monetary policy statement.

The kiwi fell to a three-week low and was trading at US73.23 cents as at 0800 on Wednesday in Wellington from US73.53c on Tuesday. The trade-weighted index declined to 77.19 from 77.43.

New Zealand’s currency has dropped 2.5 per cent so far this month as softer-than-expected data and a paring back of inflation expectations prompted traders to reduce bets the Reserve Bank will be forced to raise interest rates earlier than the 2019 date projected in its May forecast.

Governor Graeme Wheeler will deliver his final MPS on Thursday morning, and while no change is predicted in the record low 1.75 per cent official cash rate, some analysts predict any projected increase may come even later.

Meantime, the greenback has been buoyed by stronger than expected employment growth, and the June JOLTS survey of job openings showed rising demand for labour in the world’s biggest economy.

“The NZD remains somewhat heavy ahead of the RBNZ on Thursday, though a firmer USD has also helped of late with robust data meaning the same for the currency,” ANZ chief economist Cameron Bagrie.

“Market views are increasingly congregating on the RBNZ bill track being flat-lined; any sign of a hiking bias (even softly within the projections) risks sending the NZD right back up.”

With no local data, traders will be watching for Chinese inflation figures ahead of Thursday’s RBNZ review.

On Wednesday morning, the New Zealand dollar fell to 4.9113 Chinese yuan from 4.9250 yuan, dipped slightly to 62.26 euro cents from 62.29c and slipped to 56.35 British pence from 56.37p.

It fell to 92.53 Australian cents from A92.90c and dropped to 80.82 yen from 81.33 yen.


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