A surprise announcement by People's Bank of China to tighten monetary policy in the middle kingdom late Friday night led to decreased risk appetite among investors, providing a setback for the kiwi after it rose from 5-month lows to end the week about US7
A surprise announcement by People's Bank of China to tighten monetary policy in the middle kingdom late Friday night led to decreased risk appetite among investors, providing a setback for the kiwi after it rose from 5-month lows to end the week about US70c.
"Early in the night, China's decision to [further] raise commercial banks' reserve requirements (after a similar tightening last month) knocked back investors' risk appetite. The move saw equity markets around the globe start the night in the red and provided 'safe-haven' support to the USD," BNZ Markets strategist Mike Jones said.
At 9am today, the kiwi was trading at US69.62c, from US69.73c at 5pm Friday. Against the aussie, it traded for A78.38c, from A78.39c, and 0.5115 against the euro. from 0.5100. The New Zealand dollar traded for 62.70 against the yen, from 62.53 last week, and 44.39 against the pound, from 44.48 on Friday. The TWI edged up to 64.55, from 64.53.
The kiwi is likely to take cues largely from offshore this week, with "only bits and bobs on the local data schedule" this week, he said.
"Markets' main focus early in the week will be the EU Finance Ministers meeting where investors are hopeful concrete plans to sort out Greece's dire fiscal situation will be announced."
