CANBERRA: The New Zealand dollar strengthened against the other major currencies in the Asian session on Monday on hopes that the Reserve Bank of New Zealand will modify the statement to be released along with the rate decision later this week.
The RBNZ monetary policy meeting is due to be released on April 30, along with its accompanying statement from the central bank. The RBNZ is expected to keep the Official Cash Rate or OCR at 3.5% in the policy meeting, which was lifted from 2.5% in July.
The central bank said at its March 11 meeting that “future interest rate adjustments, either up or down, will depend on the emerging flow of economic data”, confirming that it did not see a need to change its policy rate for some time.
But the dovish comments made last week by the RBNZ Assistant Governor McDermott about the outlook for interest rates in the nation, indicated that the comments at the upcoming meeting will be more dovish than in March.
“We remain vigilant in watching wage bargaining and price-setting outcomes. Should these settle at levels lower than our target range for inflation, it would be appropriate to ease policy,” he said.
The two-day meeting of the US Federal Open Market Committee that ends on April 30, is also in focus. The markets expect the FOMC announcement to provide more cues about the rate path of the world’s largest economy.
Meanwhile, Asian stock markets are mostly in positive territory, as higher commodity prices lifted resource stocks. Investors also remained focused on corporate earnings results.
Last Friday, the NZ dollar fell against its major rivals. The NZ dollar fell 0.53% against the yen, 0.72% against the euro and 0.45% against the aussie.In the Asian trading today, the NZ dollar rose to a 4-day high of 0.7626 against the US dollar, from Friday’s closing value of 0.7589. The Kiwi is likely to find resistance around the 0.79 area.
Moving away from an early near 2-week low of 90.14 against the yen, the kiwi advanced to 90.67. At Friday’s close, the kiwi was trading at 90.26 against the yen. On the upside, 93.50 is seen as the next resistance level for the kiwi.
Against the euro and the Australian dollar, the kiwi edged up to 1.4245 and 1.0269, from last week’s closing quotes of 1.4297 and 1.0271, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 1.38 against the euro and 1.00 against the aussie. Looking ahead, German import price index for March is due to be released at 2:00 am ET.
At 3:00 am ET, EU commissioner Jonathan Hill, European Central Bank board members Daniele Nouy, Benoit Couere and Vitor Constancio are expected to speak at the joint conference of the European Commission and European Central Bank on “European Financial Integration and Stability” in Brussels.
