NZ dollar gains ahead of inflation data seen keeping November OCR cut
The kiwi rose to 71.09USc as at 8am in Wellington from 70.84USc in late New York trading on Friday.
The New Zealand dollar rose ahead of third-quarter inflation data tomorrow which is expected to be weak enough to keep the Reserve Bank on track to cut interest rates next month.
The kiwi rose to 71.09USc as at 8am in Wellington from 70.84USc in late New York trading on Friday. The trade-weighted index rose to 76.48 from 76.18.
The consumers price index didn't budge in the third quarter and rose just 0.1% year-on-year, according to economists at Bank of New Zealand. That's weaker than the Reserve Bank was projecting in its August monetary policy statement. Reserve BankZ assistant governor John McDermott said last week that the bank's current assumptions "indicate that further policy easing will be required to ensure that future inflation settles" within the bank's 1-3% target range. Traders have increased bets the bank will cut the official cash rate to 1.75% at its next MPS on November 10.
"A cut appears almost a done deal," said Kymberly Martin, senior market strategist at BNZ. While the Reserve Bank has projected stronger inflation than the market, with a year-on-year rise of 0.2%, "it has already made clear the error band around this forecast is 0-0.5%. This implies the bank would need to see a print above 0.5% to be genuinely surprised and consider backing off a November cut. We see this as unlikely."
Ahead of tomorrow's inflation data, traders will be watching for the performance of services (PSI) report for September due out this morning after its manufacturing counterpart, the PMI, rose to a seasonally adjusted 57.7 in September from 55.2 in August.
The kiwi dollar edged up to 93.15Ac from 93.06Ac gained to 58.51 British pence from 58.10 pence on Friday in New York. It rose to 64.82 euro cents from 64.53 cents and climbed to ¥74.13 from ¥73.77. It strengthened to 4.7841 yuan from 4.7652 yuan.
(BusinessDesk)
Jonathan Underhill
Mon, 17 Oct 2016
Mon, 17 Oct 2016
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NZ dollar gains ahead of inflation data seen keeping November OCR cut
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