NZ dollar largely flat on the week as sentiment waxes and wanes, Brexit vote looms

The New Zealand dollar is largely unchanged on the week against the greenback as investor sentiment waxed and waned with little in the way providing direction, and as traders await details on how the European Union is approaching Britain's vote to leave.

The kiwi traded at 66.16 US cents at 5pm in Wellington, down slightly from 66.29 cents last Friday in New York. It traded at 66.25 US cents at 8am, down from 66.59 cents yesterday. The trade-weighted index fell to 72.06 from 72.33 yesterday and 72.48 last week.

Traders were split on the direction of the kiwi this week in a BusinessDesk survey of eight analysts, with four picking it would remain largely unchanged, two predicting a rise and two projecting a fall. The analysts predicted the kiwi would trade between 64.50 US cents and 68.25 cents this week.

The local currency followed investor sentiment as it ebbed and flowed with Chinese markets re-opening after the Lunar New Year holiday last week, and while Wall Street was closed on Monday. Commodity price have bounced off 12-year lows on speculation producers may withhold supply in response to the global glut, while the Chicago Board Options Exchange's Volatility Index, known as Wall Street's fear gauge, has eased from a five-month high.

"This week has really been about consolidation," said Sam Tuck, senior foreign exchange strategist at ANZ Bank New Zealand in Auckland. "The kiwi's just washing around, and we're expecting that to continue."

Investors are watching how the EU is dealing with the UK's upcoming vote on whether to quit the 27-nation block, and whether any compromises will be offered to Britain to ensure it stays a member.

ANZ's Tuck said the outcome of negotiations between the nations' countries will probably provide direction for the kiwi on Monday.

The kiwi fell to 59.49 euro cents form 59.78 cents yesterday, and declined to 46.20 British pence from 46.55 pence.

The local currency slipped to 4.3148 Chinese yuan from 4.3170 yuan yesterday, and dropped to 74.69 yen from 75.85 yen. It rose to 93.13 Australian cents from 92.92 cents yesterday.

New Zealand's two-year swap rate fell three basis points to 2.48 percent, and 10-year swaps dropped five basis points to 3.17 percent.

(BusinessDesk)