Kiwi down nearly a cent over week

The New Zealand dollar held onto some of its gains, having weakened on Thursday after the Reserve Bank kept rates on hold as traders await the progress of a bipartisan funding bill in the US to keep the federal government open.

The kiwi traded at US72.12c as at 5pm yesterday, from US71.90c late on Thursday, to be down 1.2 per cent from US73.02c a week ago. The trade-weighted index advanced to 74.38 from 74.01 on Thursday.

The US funding bill had hit late hitches in the Senate and a result was expected within hours, said Mark Johnson, a senior dealer at OMF. “The US dollar is the absolute key to direction. The Fed is still in rate-hiking mode and the Reserve Bank isn’t. At the moment the kiwi is holding up but the interest rate differential will argue in favour of the US.”

Acting RBNZ governor Grant Spencer underlined how New Zealand and the US are out of sync in monetary policy this week by reiterating that “monetary policy will remain accommodative for a considerable period”. It was a message echoed by his Australian counterpart, with RBA governor Philip Lowe saying overnight on Thursday it was too soon to contemplate raising Australian interest rates.

“Neither is in a hurry,” Johnson said. The message is “they don’t need to walk in lockstep with other central banks” which are in hiking mode.

The kiwi rose to A92.69c from A91.99c on Thursday.

Johnson said current support for the kiwi was at US72c and resistance at US72.90c.

The kiwi traded at 51.75 British pence from 51.77 pence on Thursday.

The local currency rose to 58.85 euro cents from €58.57c.