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NZ dollar gains from two-month low

NZ NewswireNZ Newswire 27/05/2016 Jonathan Underhill

NZ dollar gains from two-month low © Jack Atley/Bloomberg News NZ dollar gains from two-month low The New Zealand dollar gained from a two-month low as a poll showed there's still a chance Britain will vote to exit the European Union next month, creating market uncertainty that may discourage the Federal Reserve from hiking interest rates in June.

The kiwi rose to 67.44 US cents as at 5pm in Wellington, from 67.16 cents at late yesterday. The local currency rose to 45.97 British pence from 45.64 pence late yesterday.

An ICM poll published this week showed 45 per cent of Britons favoured leaving the EU, dubbed the Brexit, while 44 per cent wanted to stay in the EU bloc.

The EU membership referendum is to be held on June 23, or about a week after the next Federal Open Market Committee.

Traders are pondering whether uncertainty over the Brexit will delay the Fed after Federal Reserve Governor Jerome Powell said a rate hike could be soon but the Fed had to weigh risks including the Brexit and China's debt levels.

"If they want to run carefully it would be July" for an interest rate hike, said Mark Johnson, senior dealer at OMF.

The kiwi recovered from Thursday's selloff caused by Fonterra setting the opening milk payout forecast for the coming season below market estimates, stoking concerns about a third season of low prices for New Zealand's largest export commodity.

The kiwi is heading for a 0.2 per cent weekly decline from about 67.62 US cents at the end of last week. Johnson said the currency would need to close below 67 cents to push much lower and seemed to be consolidating at around current levels.

The New Zealand dollar rose to 93.33 Australian cents from 93.12 cents on Thursday and gained to 60.30 euro cents from 60.04 cents. It rose to 74.08 yen from 73.70 yen and increased to 4.4255 yuan from 4.4033 yuan.

The two-year swap rate was unchanged at 2.24 per cent and the 10-year swaps fell 1 basis point to 2.86 per cent.

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