NZ dollar holds steady as traders await Financial Stability Report

The New Zealand dollar was little changed as traders await the release of the Reserve Bank's Financial Stability Report, which may detail further measures to curb the nation's bubbling housing market.

The kiwi traded at 67.56USc at 8am in Wellington, from 67.42USc at 5pm yesterday. The trade-weighted index rose to 72.16 from 72.05 yesterday.

The Reserve Bank's six-monthly gauge of financial stability was due for release this morning and was to be followed by a press conference and discussion at a parliamentary committee hearing. The kiwi has weakened ahead of the report, on speculation additional curbs on the housing market may free up governor Graeme Wheeler to reduce the official cash rate further and may bounce should that fail to eventuate, analysts say.

"The Financial Stability Report is the main event to watch today," ANZ Bank New Zealand chief economist Cameron Bagrie and senior foreign exchange strategist Sam Tuck said in a note. "Market thinking is that if the Reserve Bank acts against housing, it will remove an impediment to official cash rate cuts, which in turn would erode support for the New Zealand dollar. As the New Zealand dollar is sitting on pivotal support around 67USc , there are risks of a bounce if prudential measures are only signalled."

ANZ expects the kiwi to trade between 67.10USc and 68.10USc today.

The Real Estate Institute's monthly report on house prices is also scheduled for release today.

The New Zealand dollar slipped to 91.72Ac from 91.95Ac yesterday, ahead of Australian consumer confidence and monthly home loan data today.

The kiwi rose to 73.82 yen from 73.38 yen, advanced to 4.4015 yuan from 4.3939 yuan, gained to 59.40 euro cents from 59.27 cents, and was little changed at 46.77 British pence from 46.83 pence.

(BusinessDesk)

Tina Morrison
Wed, 11 May 2016

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NZ dollar holds steady as traders await Financial Stability Report