New Zealand Dollar Steady Late, Eyes on This Week's RBNZ Speech

 
  By Rebecca Howard 
 

        WELLINGTON, New Zealand--The New Zealand dollar was steady late Monday, consolidating after dipping on weak China data late last week.
        "The trend for NZD remains lower and we agree with the RBNZ description of depreciation as being 'necessary,'" said ANZ Bank Senior FX Strategist Sam Tuck.
        He noted that U.S. events this week should support the U.S. dollar, but markets look very well positioned for such a result, suggesting some consolidation for the kiwi over coming weeks is likely despite his six-month trend view remaining down.
        "The downside risks for kiwi remain in global commodity prices, with recent AUD/USD price action a warning against expecting too much stability," said Mr. Tuck. "Weak AUD/USD price action is expected to keep supporting the NZD/AUD," he added.
        Looking ahead, the main event this week will be a speech by Reserve Bank of New Zealand Governor Graeme Wheeler Wednesday on the economy.
        Given the proximity to the recent July review of the central bank's key rate, "we do not expect any major surprises. However, the speech may give the governor a chance to elaborate on any changes in the forecasts since the June Monetary Policy Statement," said ASB Bank Chief Economist Nick Tuffley. He noted recent RBNZ speeches have been market moving, so domestic markets will keep a close eye on this one.
        At the July official cash rate review, the RBNZ said further cuts will be likely. The key question for financial markets is exactly how many rate cuts. ASB currently expects two more, bringing the official cash rate to 2.5% by October. There is also a chance the RBNZ provides an updated assessment of its neutral interest rate assumption, added Mr. Tuffley.
        The New Zealand dollar was at US$0.6597 in late Wellington trading, compared with US$0.6592 late Friday. It was at $0.9048 Australian dollars versus $0.9031 previously.
        Write to Rebecca Howard at rebecca.howard@wsj.com; @FarroHoward
        (END) Dow Jones Newswires

        July 27, 2015 02:13 ET (06:13 GMT)

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