Kiwi slips as traders await deluge of info
The New Zealand dollar slipped as traders await a slew of information on Thursday, including a dairy auction, the US Federal Reserve rate decision, and local gross domestic product figures.
The kiwi fell to 70.33 US cents at 5pm in Wellington from 70.50 cents at 8am and 70.56 cents on Friday in New York. The trade-weighted index declined to 75.20 from 75.47 last week.
Local trading was lighter than usual with Australian markets closed for the Queen's Birthday holiday, leaving traders waiting for information later in the week to dictate where the kiwi will head. The Federal Open Market Committee rate review is at the top of their list, though local GDP data and a dairy auction will be major gauges for New Zealand's own Reserve Bank to measure in its monetary policy statement in August. A Bank of Japan policy review and Australian employment figures are also out on Thursday.
"The market's got a bit long for the kiwi and I do like it lower," said Michael Johnston, senior trader at HiFX in Auckland. "It's hard to justify it above 70 cents against the US or 95.5 versus the Aussie."
Johnston said the strength of the currency has to be playing on the Reserve Bank's mind, and that intervention could be warranted given the kiwi's strength wasn't justified by economic fundaments, its deflationary effects meant cutting rates would be in line with the policy target agreements, and that market conditions could favour the central bank intervening.
"If the currency starts to push up and they don't cut rates in August, they could possibly look to intervene," Johnston said. "It will be on their radar."
The kiwi was little changed near a 13-month high at 49.56 British pence from 49.64 pence last week after a poll showed UK voters were leaning towards leaving the European Union on the June 23 referendum. The local currency decreased to 62.51 euro cents from 62.71 cents.
The local currency fell to 74.49 Japanese yen from 75.45 yen last week and gained to 4.6312 Chinese yuan from 4.6280 yuan. It decreased to 95.32 Australian cents from 95.67 cents last week.
New Zealand's two-year swap rate fell three basis points to 2.27 percent, and 10-year swaps were down four basis points to 2.79 percent.