Kiwi drifts as investors await today’s Aussie rate call

The New Zealand dollar stuck to a very tight range Monday ahead of key central bank meetings both here and in Australia this week.

The kiwi traded at US67.36c versus US67.41c on Friday.

The trade-weighted index was almost unchanged at 72.66 from 72.67 last week.

The New Zealand dollar drifted on the day as investors await the Reserve Bank of Australia’s rate decision today, followed by the New Zealand central bank on Thursday. The RBA is not expected to move rates but ANZ Bank New Zealand senior macro strategist Phil Borkin said it could be a little more dovish, given pressures in the housing market. Data last week from property analysts CoreLogic points to accelerating housing downturn across the country, according to ABC News.

Borkin noted, however, there won’t be much detail until the statement on monetary policy is published at the end of the week.

The kiwi increased to A91.16c from A90.92c last week.

On Thursday, the RBNZ is also expected to keep rates on hold at record lows but the bank’s forecasts on growth, inflation and interest rates will be closely watched as will governor Adrian Orr’s press conference for any clues on its future direction.

Otherwise, “the global vibe in general” will be watched, given the ongoing trade tensions between the US and China, said Borkin.

The kiwi traded at 4.5998 Chinese yuan from 4.6054 yuan as markets digested news the People’s Bank of China reintroduced a 20 per cent reserve requirement for foreign exchange forwards. That makes it more expensive for traders to take a short position on the yuan, predicting the currency will depreciate and can be bought back at a cheaper price.

The local currency traded at 75.02 yen from 75 yen. It was at 58.31 euro cents from 58.24 cents and traded at 51.86 British pence from 51.81 pence.

New Zealand’s two-year swap rate was down 1 basis points at 2.10, while 10-year swaps decreased 3 basis point to 3.01 per cent.