You are using an older browser version. Please use a supported version for the best MSN experience.

NZD up as RBNZ speech disappoints traders

NZ NewswireNZ Newswire 7/07/2016 Jonathan Underhill
© Getty Images

The New Zealand dollar gained after the Reserve Bank said it could unveil new macroprudential tools by the end of the year to curb an overheated housing market, disappointing traders who'd expected new measures sooner.

The kiwi rose to 71.62 US cents after the speech from RBNZ deputy governor Grant Spencer, from 71.40 cents late Wednesday. The local currency slipped to 95.28 Australian cents from 95.75 cents on Wednesday but recovered from as low as 94.63 cents, helped by the Spencer speech and Standard & Poor's earlier downgrading Australia's rating outlook to negative from stable.

The Reserve Bank is looking at introducing more stringent macroprudential tools before the end of the year, but would be helped if the government chose to revisit the impact tax advantages on residential housing and migration policies are having on demand, Spencer said in a speech to the New Zealand Institute of Valuers in Wellington. Traders were watching for more definite moves in the speech because efforts to cool the housing market would be read as a sign the central bank will cut interest rates again in August.

"If there was a strong indication, then the market will believe it is opening the door for rate cuts in August," said Martin Rudings, a senior dealer at OMF.

Rudings said the market is awaiting US non-farm payrolls on Friday amid expectations the shock low 38,000 jobs added in May will be revised up and payrolls for June will be closer to normal. Still, he said there's a risk the latest month's data undershoots the 175,00 to 210,00 jobs some economists are expecting.

The kiwi rose to 55.31 British pence from 54.78 pence yesterday after more UK commercial property funds suspended redemptions in the wake of last month's vote to leave the European Union, stoking fears Britain could tip into recession.

The trade-weighted index rose to 76.72 from 76.54. The kiwi declined to 72.26 yen from 72.61 yen and gained to 64.73 euro cents from 64.49 cents. It climbed to 4.7978 yuan from 4.7674 yuan.

The two-year swap rate rose 3.5 basis points to 2.175 per cent and 10-year swaps dropped 8 basis points to 2.48 per cent.

image beaconimage beaconimage beacon