NZ dollar slips below US70c after failing to break above key resistance level

The New Zealand dollar slipped back below 70 US cents overnight after it failed to break through a key resistance level yesterday, prompting traders to bank profits ahead of the Reserve Bank interest rate review next week. 

The kiwi dropped to 69.72 US cents at 8am in Wellington, from 70.08 cents at 5pm yesterday. The trade-weighted index declined to 73.20 from 73.48 yesterday.

The New Zealand dollar declined even as commodity prices gained as traders bet its appreciation through 70 US cents may have gone too far, and sold the currency to take profits. The kiwi touched a 10-month high of 70.54 US cents early yesterday morning, but failed to break higher ahead of the Reserve Bank's review of interest rates next week where traders are betting on a 55 percent chance that interest rates will remain unchanged, and a 45 percent chance of a cut.

"We touched an upside support resistance level yesterday and failed to gain any momentum to push on through it, that lies around the 70.50 US cent area, so that kind of stopped the momentum higher," said Stuart Ive, OMF senior dealer, foreign exchange. "We are still within striking distance but with the RBNZ next week, the focus will certainly be switching towards that so we can expect the kiwi to perhaps come back as people bank profits from the recent rise ahead of that meeting."

Also aiding the kiwi's slide was an appreciation in the US dollar and news reports that Finance Minister Bill English plans to step up his oversight of the central bank, prompting speculation he favours more interest rate cuts.

In New Zealand today, migration and tourism data for March will be released at 10:45am and the ANZ-Roy Morgan consumer confidence report is published at 1pm. 

The New Zealand dollar fell to 89.46 Australian cents from 90.01 cents yesterday, declined to 48.64 British pence from 48.78 pence, and dropped to 4.5091 yuan from 4.5296 yuan.

The kiwi advanced to 61.73 euro cents from 61.68 pence ahead of the European Central Bank meeting today and gained to 76.52 yen from 76.36 yen.

(BusinessDesk)