The New Zealand dollar rose ahead of a speech by Reserve Bank governor Graeme Wheeler, on speculation he may soften his language about an easing bias, and after stocks rebounded and commodities gained.
The kiwi dollar rose to 66.77 US cents as at 8am in Wellington, having earlier gained to as high as 67.08 cents, from 66.61 cents late yesterday. The trade-weighted index rose to 71.01 from 70.90.
Stocks on Wall Street rallied overnight, sending the Standard & Poor’s 500 Index up more than 1 percent, while the Thomson Reuters/Jefferies CRB Index rose about 0.8 percent, easing concern the slump in Chinese equities would continue to weigh on global markets.
Locally, Wheeler is due to give a speech on the economy to a private briefing, with notes released at 9am this morning. It will be his first since last week cutting the official cash rate to 3 percent, while saying that “softening in the economic outlook” meant “some further easing seems likely.”
“The market appeared to be pre-positioning itself for a more balanced RBNZ in today’s speech, as opposed to a bank that will show an aggressive easing bias,” Kymberly Martin, a strategist at Bank of New Zealand, said in a note. “We would concur with this view, although we still see the RBNZ delivering at least one more 25 basis point rate cut and most likely two, taking the OCR back to 2.50 percent.”
She said traders are ready to sell the kiwi if it rises as high as 67.70 US cents and Bank of New Zealand’s medium-term view is for renewed weakness in the currency.
With Wheeler’s speech out of the way, attention will turn to the US Federal Open Market Committee deliberations, due out tomorrow, which may provide further clues to the timing of rate hikes by the Federal Reserve.
The kiwi gained to 91.06 Australian cents from 90.98 cents late yesterday. It traded at 82.36 yen from 82.33 yen and gained to 60.29 euro cents from 60.13 cents. The currency was little changed at 42.71 British pence from 42.77 pence.