Kiwi climbs to two-week high on Orr appointment
The New Zealand dollar rose to a two-week high on optimism about the appointment of Adrian Orr as next governor of the Reserve Bank while, globally, markets are awaiting a raft of central bank reviews this week.
The kiwi gained to 69.12USc as at 8am in Wellington from 68.86USc late yesterday. The trade-weighted index rose to 73.23 from 72.96.
The kiwi dollar climbed yesterday on news that NZ Superannuation Fund chief Mr Orr had been named Reserve Bank governor after a unanimous recommendation from the bank board. Meanwhile, the Federal Reserve is expected to hike US interest rates on Thursday morning New Zealand time and both the European Central Bank and Bank of England have monetary policy decisions due on Thursday, rounding out a week dominated by central bank activity.
"The market reaction seems to imply that Orr will oversee a somewhat less dovish policy than his predecessor, with the Reserve Bank 's current projections not building in a rate rise until 2019," said Nick Smyth, interest rate strategist at Bank of New Zealand, in a note. "It seems a little early to speculate," he wrote. "The Reserve Bank will also have a committee deciding the OCR, of which the governor will have only one vote (albeit an important one if he can influence the committee's thinking)."
The Fed is expected to hike the fed funds target range by a quarter point to 1.25-1.50% and "if anything, we think the risks are tilted toward a few participants nudging up their rate forecasts for next year as FOMC members may bump up their forecasts for growth on the back of the recently agreed tax reform plan," Mr Smyth said.
There was little market reaction to an intended terror attack in a New York subway station that left four people injured. Police detained a Bangladeshi immigrant, who injured himself with the homemade device. With no economic data scheduled today in New Zealand, traders will be initially watching across the Tasman for reports including November business confidence, house prices for the third quarter and credit card purchases.
The kiwi rose to 91.75Ac from 91.53Ac late yesterday.
The local currency advanced to 51.78 British pence from 51.40 pence and to 58.61 euro cents from 58.44 cents. It gained to 78.44 yen from 78.18 yen and rose to 4.5770 yuan from 4.5562 yuan.