Kiwi weakens slightly after volatile week

The New Zealand dollar was slightly weaker after gaining a third of a US cent through a volatile week in which central banks featured large.

The kiwi was trading at US62.90c at 5pm in Wellington from US63c at 8.10am. That was down from the week’s high at US63.48c but up from US62.56c in New York last Friday. The trade-weighted index was at 70.27 from 70.38.

Both the Reserve Bank of New Zealand and Reserve Bank of Australia governor Philip Lowe failed to provide strong signals about their next moves, with the RBNZ leaving its cash rate at 1 per cent after Wednesday’s review. The US Federal Reserve dampened down expectations of further cuts after it cut its Fed funds rate earlier this month.

“The focus in the very short term for Kiwi markets is ‘are we going to get a cut in November?’,” he said. Currently, only about 18 basis points of the expected 25-point cut is priced into the market.

Across the Tasman the market has priced in 19 basis points of an expected 25-point cut next Tuesday.

Other market concerns, such as Brexit and the US-China trade war are a long way from being settled. The most recent trade news is that US President Donald Trump has said China has started buying US farm products ahead of high-level negotiations.

The New Zealand dollar was at A93.07c from A93.29c, at GB51.01p from GB51.11p, at €57.57c from €57.66c, at 67.73 yen from 67.93, and at 4.4883 Chinese yuan from 4.4912.

The two-year swap rate edged down to a bid price of 0.9432 per cent from 0.9463 yesterday; 10-year swaps fell to 1.1950 per cent from 1.2100.