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Kiwi steady ahead of MPS

NZ Newswire logoNZ Newswire 9/08/2017 Jonathan Underhill
After falling to a two-month low the kiwi dollar has recovered some lost ground against the greenback. © Getty After falling to a two-month low the kiwi dollar has recovered some lost ground against the greenback.

The New Zealand dollar was little changed, having fallen this week ahead of the Reserve Bank's monetary policy statement, which is expected to reiterate it sees no hurry to join other central banks in raising interest rates.

The kiwi traded at US73.26 cents as at 8am on Thursday in Wellington from US73.16c late Wednesday. The trade-weighted index was little changed at 77.26 from 77.19.

RBNZ Governor Graeme Wheeler, in his last MPS before he retires, is expected to keep the official cash rate unchanged at 1.75 per cent on Thursday morning and traders will be more focused on the bank's projections for interest rates, inflation and economic growth.

At the May MPS, only one quarter-point rate hike was projected by 2020 and there has been speculation Thursday's forecasts will be just as flat. The kiwi wasn't much hurt by a drop in risk sentiment amid an escalating exchange of threats between North Korea and the US.

"We expect Governor Wheeler to play with a straight bat today in his final showing as governor, running with a similar tone adopted all year," said BNZ currency strategist Jason Wong.

"The underlying message will be that the RBNZ is in no hurry to join some other major central banks in looking to remove policy accommodation."

The market was reluctant to push the kiwi lower "even with the US-North Korea sabre-rattling in the background," he said.

On Thursday morning, the kiwi was trading at 80.50 yen from 80.42 yen late Wednesday and at 4.8892 yuan from 4.8950 yuan. It traded at 62.33 euro cents from 62.31c, was at 56.36 British pence from 56.34p and at 92.88 Australian cents from A92.91c.

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