NZ dollar extends gains after inflation data, dairy auction
The local currency rose to 71.94USc as at 8:30am in Wellington from 71.85USc late yesterday.
The New Zealand dollar extended its gains after stronger-than-expected third-quarter inflation and the first increase in whole milk powder prices in three GlobalDairyTrade auctions.
The local currency rose to 71.94USc as at 8:30am in Wellington from 71.85USc late yesterday. The trade-weighted index edged up to 77.16 from 77.10.
The GDT price index rose 1.4% to $US2965 in the GDT auction, with whole milk powder rising 2.9% to $US2760 a tonne, a move broadly in line with expectations in the futures market. The auction result added to upbeat sentiment for the kiwi, one of the strongest performing currencies in the past 24 hours, after figures yesterday showed inflation rose 0.2% in the third quarter, against expectations of no change.
Inflation "was only marginally above consensus expectation but the sharp move in the currency was likely exacerbated by positioning ahead of the release," Kym Martin, senior market strategist at Bank of New Zealand said. "Upward momentum in the $NZ/$US continued overnight, uninterrupted by a GDT dairy auction that threw up few surprises."
Traders are putting odds of a Reserve Bank rate cut on November 10 at 80%, slightly lower than their bets ahead of the consumers price index release yesterday, amid speculation the central bank, which expects to return inflation to the bottom end of its 1-3% target range in the fourth quarter, is nearing the end of its easing cycle.
"As the market starts to acknowledge the end of the rate cutting cycle, its attention will turn to the next eventual hiking cycle," Ms Martin said.
The kiwi dollar rose to 93.80Ac from 93.68Ac yesterday, while slipping to 58.46 British pence from 58.76 pence and strengthening to 65.49 euro cents from 65.18 cents. It climbed to ¥74.66 from ¥74.57 and rose to 4.8448 yuan from 4.8428 yuan.
(BusinessDesk)
Jonathan Underhill
Wed, 19 Oct 2016
Wed, 19 Oct 2016
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NZ dollar extends gains after inflation data, dairy auction
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