Waiting for Thursday's global events: kiwi little changed

The New Zealand dollar was little changed in a week that's expected to include an interest rate hike from the Federal Reserve and in the domestic market will include economic growth figures for the fourth quarter.

The kiwi dollar traded at 69.35USc from 69.28USc in New York on Friday. The trade-weighed index was at 75.93 from 75.91 on Friday.

"It's seen a very small rally, on the back of what looks like a lower US dollar index," said Ross Weston, FX trader at Kiwibank. He expects the kiwi to trade in a range of 69USc to 70USc ahead of news events this week.  "All the big events are on Thursday, and that's what the markets are focused on," he said.

Markets are widely expecting the US Federal Reserve to lift rates this Thursday and will also be watching for the Dutch election results mid-week, a budget release from US President Donald Trump and Australian jobs data, Mr Weston said. 

"It's going to be pretty quiet until then. Other than that we will just be at mercy of the big dollar," he said. 

Domestically the fourth quarter balance of payments and the gross domestic product data will be in focus.

Bank of New Zealand head of research Stephen Toplis said the GDP is likely to come in much weaker than the central bank is forecasting, which "may force the Reserve Bank into a rethink of sorts."

"The fact that the data are so dated could limit any possible adverse NZ dollar reaction but the balance of risk is for a negative NZ dollar reaction," he said.  However, "we remain very strong in our view that the Reserve Bank will be forced into tightening well in advance of its published track."

The kiwi dollar traded at 64.83 euro cents from 65.16 cents on Friday. It remained under pressure after weekend reports that the European Central Bank may begin raising interest rates even before the end of its quantitative easing programme.

The kiwi traded at 91.61Ac from 91.74Ac in New York on Friday. It was at 4.7900 yuan from 4.7852 yuan and ¥79.61 from ¥79.45. It was at 56.94  British pence from 56.88 pence last week.

The two-year swap rate was 1 basis point higher at 2.32 percent and 10-year swaps eased 2 basis points to 3.58 percent.

(BusinessDesk)