Brexit, trade deal hopes boost kiwi
The NZ dollar rose with hopes that Britain and Europe may agree on a Brexit deal and after China confirmed it continues to work on a preliminary trade deal with the US.
The local currency also outperformed as traders reassessed recent positive economic news and decided the Reserve Bank’s next rate cut, expected next month, may be its last for a while.
The kiwi was trading at US63.69c at 5pm yesterday from US63.47c at 7.50am.
The trade-weighted index was at 70.52 points from 70.28.
“The kiwi did outperform other currencies during the afternoon. My guess is that the market’s reassessing the chances for another easing from the Reserve Bank after November in light of fairly strong nontradeables inflation, the pick-up in house prices, and commodity prices which are also holding up quite well,” says Imre Speizer, currency strategist at Westpac.
“Dairy prices have risen gradually over the last few months, meat prices are elevated and overall commodities are basically holding up well,” Speizer says.
“It doesn’t point to a Reserve Bank needing to go below 0.75 per cent.”
The bank’s official cash rate currently stands at 1 per cent and the market is expecting it to cut to 0.75 per cent at its monetary policy committee’s next meeting on November 13.
The outcome of the Brexit deal vote over the weekend will be crucial in determining how the New Zealand currency trades next week, Speizer says.
The NZ dollar was trading at A93.24c from A93.00c, at 49.55 British pence from 49.33p, at 57.24 euro cents from €57.06c, at 69.12 yen from ¥68.98, and at 4.5064 Chinese yuan from 4.4932