NZ dollar ends November where it started: MPS next week

Article – BusinessDesk

NZ dollar ends November where it started ahead of next
week’s RBNZ review

By Paul McBeth

Nov. 30
(BusinessDesk) – The New Zealand dollar is set to end the
month virtually unchanged against the greenback as US
politicians try to navigate away from the fiscal cliff and
trans-Tasman central banks prepare to review monetary policy
next week.

The kiwi traded at 82.23 US cents at 5pm in
Wellington from 82.24 cents at 8am, and down from 82.41
cents yesterday. The trade-weighted index fell to 73.58 from
73.74 yesterday, and is poised for 0.5 percent monthly gain.

Institutional investors will likely keep their asset
allocations unchanged after a flat month in global equity
markets, meaning the kiwi dollar isn’t likely to get pushed
around in the month-end tinkering by large finance houses.
That comes as US legislators from opposing political parties
struggle to meet any common ground in trying to avert he
automatic US$607 billion in tax increases and spending cuts
which kick in on Jan. 1.

“Equity markets are pretty flat
for the month, so there’s not much portfolio adjustment
going on,” said Tim Kelleher, head of institutional FX sales
NZ at ASB Institutional in Auckland. “The kiwi wants to
drift lower.”

The kiwi dollar crept up to 78.86 Australian
cents at 5pm in Wellington from 78.75 cents as central banks
on both sides of the Tasman prepare to review their
respective monetary policies.

Traders are pricing a 77
percent chance the 3.25 percent target cash rate will be
trimmed, according to the Overnight Index Swap curve. New
Zealand’s central bank, which also meets next week, is
being given a 14 percent chance of a cut to its 2.5 percent
official cash rate, meaning Australia’s yield advantage
will probably narrow.

Kelleher said “markets are taking a
slightly dovish tone going into the MPS” in New Zealand,
after governor Graeme Wheeler previously indicated he would
talk about the currency at the meeting.

New Zealand’s
currency increased to 67.81 yen from 67.65 yen yesterday,
and declined to 51.25 British pence from 51.45 pence. It
fell to 63.27 euro cents from 63.63 cents


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