Kiwi falls ahead of inflation data that may undershoot RBNZ forecast
The New Zealand dollar fell ahead of second-quarter inflation data which is expected to come in weaker than the Reserve Bank has forecast and giving it little reason to contemplate raising interest rates anytime soon.
The kiwi traded at 73.16 US cents, down from 73.30 cents late yesterday. The trade-weighted index slipped to 77.85 from 77.97.
Economists expect inflation was 0.2 percent in the three months ended June 30, for an annual rate of 1.9 percent, according to the median in a poll of 15 economists surveyed by Bloomberg. That would be below the central bank's projection of inflation of 0.3 percent in the second quarter for an annual rise of 2.1 percent. The figures may dispel speculation the RBNZ would be encouraged to hike rates in keeping with central banks such as Canada's.
"We see the data reinforcing the RBNZ's decisively neutral policy stance for some time," said Jason Wong, currency strategist at Bank of New Zealand. "If anything, inflation is tracking below the Bank's projections, given the combination of a stronger NZD and lower oil prices since the May MPS."
Traders will be watching for the release of the minutes of the Reserve Bank of Australia's latest meeting today and tonight, the GlobalDairyTrade auction.
Nigel Brunel, director of financial markets at OMF said that based on the direction of skim milk and whole milk powder (WMP) futures on the NZX, he expects the GDT Index to be "to be slightly up led by WMP."
The kiwi slipped to 63.70 euro cents from 63.93 cents late yesterday and fell to 82.37 yen from 82.53 yen. It fell to 4.9515 yuan from 4.9615 yuan and rose to 56.04 British pence from 55.97 pence. The kiwi traded at 93.85 Australian cents from 93.81 cents yesterday.