Dollar slips as investors weigh competing tensions ahead of RBNZ decision

The New Zealand dollar slipped as investors weigh the negative signs of a slowing economy against the lure of rising interest rates.

The kiwi edged lower to 86.89 US cents at 8am in Wellington, from 87.12 cents at 5pm yesterday. The trade-weighted index declined to 80.91 from 81.05 yesterday.

The New Zealand dollar fell last week following more upbeat testimony from Federal Reserve chair Janet Yellen which boosted the greenback, and as a drop in dairy prices and slower-than-expected inflation dented demand for the local currency. Still, the Reserve Bank is expected on Thursday to hike interest rates for a fourth time this year, increasing the lure of the kiwi in a global environment of low interest rates.

"It's hovering, it's not inclined to go anywhere," said Peter Cavanaugh, client adviser at Bancorp Treasury Services. "Everybody is in agreement that sometime in the future the kiwi is going to be lower but nobody is prepared to take that first step and say when, and equally, no one is prepared to make that first step and push it down.

"We have seen the New Zealand dollar run into tremendous support at these levels," Cavanaugh said. "At the moment, the higher New Zealand dollar shows how much cash is king. It's global cash, and cash looking for yield and looking for return."

Reserve Bank deputy governor Grant Spencer is scheduled to speak about prudential regulation at 5pm.

In Australia, Reserve Bank of Australia assistant governor financial markets Guy Debelle is speaking at an investors forum in Sydney and governor Glenn Stevens is speaking at the Anika Foundation luncheon in Sydney.

The New Zealand dollar edged lower to 92.67 Australian cents from 92.72 cents yesterday, weakened to 64.27 euro cents from 64.32 cents, declined to 50.88 British pence from 50.95 pence and slipped to 88.09 yen from 88.18 yen.

(BusinessDesk)

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NZ Market Snapshot

Forex

Sym Price Change
USD 0.7845 0.0017 0.22%
AUD 0.8994 0.0002 0.02%
EUR 0.6203 0.0010 0.16%
GBP 0.4929 0.0003 0.06%
HKD 6.0847 0.0131 0.22%
JPY 84.0120 0.0180 0.02%

Commods

Commodity Price Change Time
Gold Index 1233.8 -1.760 2014-10-14T00:
Oil Brent 85.4 -4.470 2014-10-14T00:
Oil Nymex 81.2 -4.530 2014-10-14T00:
Silver Index 17.4 0.035 2014-10-14T00:

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Symbol Open High Last %
NZX 50 5145.9 5168.7 5145.9 0.33%
NASDAQ 4246.2 4281.3 4213.6 0.32%
DAX 8765.4 8854.4 8812.4 0.15%
DJI 16321.9 16463.7 16321.1 -0.04%
FTSE 6366.2 6403.4 6366.2 0.42%
HKSE 23087.5 23230.3 23048.0 0.67%
NI225 15009.8 15044.3 14936.5 -0.13%