NZ dollar slips from 11-wk high, seen resuming upward trend

Article – BusinessDesk

Dec. 30 (BusinessDesk) – The New Zealand dollar fell from an 11-week high but is seen resuming its upward trend as the nation’s relatively appealing interest rates attract investors.

NZ dollar slips from 11-week high, seen resuming upward trend on yield appeal

Dec. 30 (BusinessDesk) – The New Zealand dollar fell from an 11-week high but is seen resuming its upward trend as the nation’s relatively appealing interest rates attract investors.

The kiwi traded at 68.55 US cents as at 5pm in Wellington, having earlier risen as high as 68.86 cents, from 68.69 cents late yesterday. The trade-weighted index fell ton 74.39, having earlier reached a six-month high of 74.57 from 74.50 yesterday.

With few central banks other than the US Federal Reserve talking about raising interest rates, New Zealand’s official cash rate of 2.5 percent is a standout in a world where rates in the US, Europe, the UK and Japan are below 1 percent. While the Fed’s tightening bias may eventually lift the greenback and some traders still expect a further cut from the Reserve Bank of New Zealand, for now the yield differential is favouring the kiwi.

“The kiwi is a pretty good place to be,” said Kevin Morgan, senior dealer at OMF. “There’s a lack of anticipation of upward movement by any central bank other than the Fed.”

Morgan said the New Zealand dollar will face technical resistance if it breaks above 69 US cents, a level it hasn’t reached since xxx. If it does breach 69 cents, it could rise to between 71 cents and 72 cents, he said. Some exporters are helping lift the kiwi by bringing back their overseas sales, he said.

The local dollar has also been helped by a recovery in commodity prices. The Thomson Reuters/Core Commodity CRB Commodity Index has gained from its lowest levels in more than 13 years.

The New Zealand dollar fell to 4.4468 yuan from 4.4548 yuan yesterday. It edged up to 46.19 British pence 46.08 pence yesterday and rose to 62.70 euro cents from 62.55 cents. It fell to 82.56 yen from 82.63 yen and declined to 94.06 Australian cents from 94.51 cents yesterday.

The two-year swap rate was unchanged at 2.84 percent and 10-year swaps were at 3.74 percent.

(BusinessDesk)

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