The kiwi rose to US$0.7109 as at 8am in Wellington from 0.7084 in late New York trading on Friday. The trade-weighted index rose to 76.48 from 76.18.
The consumers price index didn’t budge in the third quarter and rose just 0.1% year-on-year, according to economists at Bank of New Zealand. That’s weaker than the Reserve Bank was projecting in its August monetary policy statement. RBNZ assistant governor John McDermott said last week the bank’s assumptions “indicate that further policy easing will be required to ensure that future inflation settles” within the bank’s 1%-to-3% target range. Traders have increased bets the bank will cut the official cash rate to 1.75% at its next MPS on November 10.
“A cut appears almost a done deal,” BNZ senior market strategist Kymberly Martin said. While the RBNZ has projected stronger inflation than the market, with a year-on-year rise of 0.2%, “it has already made clear the error band around this forecast is 0-0.5%. This implies the bank would need to see a print above 0.5% to be genuinely surprised and consider backing-off a November cut. We see this as unlikely.”
Ahead of tomorrow’s inflation data, traders will be watching for the performance of services (PSI) report for September due out this morning after its manufacturing counterpart, the PMI, rose to a seasonally adjusted 57.7 in September from 55.2 in August.
The kiwi dollar edged up to A$0.9315 from 0.9306 and gained to £0.5851 from 0.5810 on Friday in New York. It rose to €0.6482 from 0.6453 and climbed to 74.13 yen from 73.77 yen. It strengthened to 4.7841 yuan from 4.7652 yuan.
© BusinessDesk
