Kiwi little changed, having touched 4-week high overnight

Traders almost unanimously expect a quarter point hike from the Fed at the end of its two-day meeting tomorrow morning.

The New Zealand dollar was little changed, having reached its highest level in more than four weeks overnight, as markets await policy decisions from the Federal Reserve, European Central Bank and the Bank of England, US inflation and, at home, the budget update.

The kiwi dollar traded at 69.29 US cents as at 8am in Wellington, and earlier reached 69.52 cents, from 69.27 cents late yesterday. The trade-weighted index was at 73.45 from 73.43.

Traders almost unanimously expect a quarter point hike from the Fed at the end of its two-day meeting tomorrow morning NZ time and will be watching for signals of further increases, which may be underpinned by looming US consumer prices data for November. US producer prices rose more than expected last month and confidence among small businesses reached its highest level in 34 years. With the ECB and BoE also due to make policy statements, monetary policy will be a key theme for financial markets this week.

"It is set to be a busy few days in markets, with some key central bank decisions," said Philip Borkin, senior economist at ANZ Bank New Zealand. "With some key events scheduled over the next day or so, it is likely that the NZD faces a little more volatility than what it has experienced over the past 24 hours. Even so, it does appear to be sitting relatively comfortably right now and is threatening a further squeeze higher."

The Fed may end up overshadowing local news on Thursday, with the highlight being the half-year fiscal and economic update and budget policy statement, which will show how the new government will fund its policies and the Treasury's economic assumptions.

In New Zealand, the food price index and real estate figures for November will be watched by traders.

The kiwi slipped to 91.72 Australian cents from 91.96 cents late yesterday on news that European shopping mall owner Unibail-Rodamco has agreed to buy Westfield for A$32.7 billion.

The local currency advanced to 52.07 British pence from 51.91 pence and gained to 59.07 euro cents from 58.86 cents. It traded at 78.67 yen from 78.63 yen and rose to 4.5890 yuan from 4.5874 yuan.

(BusinessDesk)