Greenback’s ongoing pain to NZ dollar’s gain

The New Zealand dollar consolidated near a four-month high the past week as betting on another interest rate cut next year dwindled while the odds of a February cut by the Reserve Bank of Australia increased.

The kiwi was at US65.55c at 5pm yesterday from US65.46c at 8am and from US64.20 cents in New York last Friday. The tradeweighted index was at 72.42 from 72.34.

“It’s US dollar weakness, kiwi strength,” said Martin Rudings, a dealer at OMF, adding that the US dollar has weakened in each of the past seven trading days.

Less-onerous-than-expected new bank capital rules the Reserve Bank of New Zealand announced on Thursday and a raft of positive data have spurred the currency’s gains to its highest levels since early August.

Near-record terms of trade, Septemberquarter retail sales coming in three times economists’ expectations and still-pessimistic but improving business sentiment have all nudged the kiwi dollar higher.

The market is now pricing in a 70 per cent chance of the RBA cutting rates at its February meeting but the pricing on a likely cut by the RBNZ has eased to 15 per cent.

That saw the kiwi rise to A95.86c yesterday from A95.77c at the start of the day and A94.83c a week before.

The “Trump” factor continues in the background but the market is reacting less each time the US President utters the latest contradictory comment on the likelihood he will sign a long-promised preliminary trade deal with China.

The kiwi dollar was trading at 59.02 euro cents from 58.96, at 49.81 British pence from 49.75, at 71.24 yen from 71.19, and at 4.6192 Chinese yuan from 4.6120.