Dollar holds above $US88c, may test record high this week

The New Zealand dollar held above 88 US cents and may test its post-float high this week as traders prepare for testimony from US Federal Reserve chair Janet Yellen and local data that's expected to confirm inflation is accelerating.

The kiwi traded at 88.03 USA cents at 8am in Wellington, little changed from the New York and Wellington closes on Friday last week. The trade-weighted index was at 81.90 from 81.89.

Second-quarter inflation figures due on Wednesday are expected to show the consumer price index sped to 0.4 percent last quarter for an annual pace of 1.8 percent, according to a Reuters survey. That would be a tad faster than the Reserve Bank forecast last month and keep intact expectations that governor Graeme Wheeler will raise interest rates again as soon as this month, lifting the official cash rate to 3.5 percent.

Yellen is scheduled to deliver her semi-annual policy testimony to the Senate Banking Committee tomorrow and address the House Financial Services Committee the following day, after minutes of the June Fed meeting showed that policy makers are planning to end their monthly bond-buying programme after the October gathering.

"The price action tells you there's fairly decent demand" for the kiwi, said Sam Tuck, senior FX strategist at ANZ New Zealand. "It has been unable to break through the psychological level of 88.42, the post-float high. It's a sign we really need to make new ground. The catalyst may come from Q2 CPI or Yellen."

ANZ New Zealand's CPI forecasts match the market consensus, "which would be consistent with the RBNZ," Tuck said.

He sees the kiwi trading in a range of 87.90 US cents to 88.35 cents in the next 24 hours and a range of 87.60 cents to 89 cents in the week.

"It has been a gradual grind higher since the June MPS" for the kiwi, he said. "It is stubbornly bid."

The local currency traded at 64.73 euro cents, little changed from the New York close, and little changed at 51.41 British pence. The New Zealand dollar was almost unchanged at 93.85 Australian cents and traded at 89.24 yen.

(BusinessDesk)


Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7229 0.0000 0.00%
AUD 0.9558 0.0000 0.00%
EUR 0.6462 0.0000 0.00%
GBP 0.5509 0.0000 0.00%
HKD 5.6125 0.0000 0.00%
JPY 73.5500 0.0000 0.00%

Commods

Commodity Price Change Time
Gold Index 1322.6 -0.520 2016-08-26T00:
Oil Brent 50.1 0.060 2016-08-26T00:
Oil Nymex 47.6 0.310 2016-08-26T00:
Silver Index 18.6 0.160 2016-08-26T00:

Indices

Symbol Open High Last %
NZX 50 7427.8 7430.4 7427.3 -0.48%
NASDAQ 5219.1 5253.4 5212.2 0.13%
DAX 10512.2 10613.1 10529.6 0.55%
DJI 18467.9 18572.1 18448.4 -0.29%
FTSE 6816.9 6857.3 6816.9 0.31%
HKSE 22827.2 22997.4 22815.0 0.41%
NI225 16485.5 16490.5 16556.0 -1.18%
ASX 5541.9 5544.4 5541.9 -0.48%