Today’s Commentary
The New Zealand dollar hit a nine-day low on Wednesday, dragged down by a weaker Australian dollar on the eve of a pivotal decision on interest rates by New Zealand central bank. A survey showing business confidence steady near 10-year highs reinforced expectations that the Reserve Bank of New Zealand (RBNZ) would close the door on another possible rate cut after its meeting today. The Kiwi fell as its Aussie cousin and dropped on inflation data which was not strong enough to bolster rate hike expectations, while the US dollar consolidated recent gains as risk appetite was weaker. Business confidence dipped slightly in October from the 10-year high seen in September, but underlined the momentum of the economic recovery, and would inevitably lead to tighter monetary policy, the ANZ-National Bank said.
The USD and Japanese Yen strengthened on Wednesday as concerns about a global economic recovery and falling stock prices revived safe-haven demand for both currencies. A report showing an unexpected fall in US new home sales for September offset earlier solid durables goods data and renewed worries about the health of the housing sector. A deterioration in risk appetite also sent higher-yielding, commodity currencies sharply lower. The Australian dollar fell 2 percent, pressured partly by Australian inflation data, which suggested the country’s central bank was unlikely to tighten interest rates sharply.
Local data due this week includes September trade today and September building consents on Friday.
Upcoming Announcements:
• 29 Oct 2009: NZ RBNZ Interest Rate Announcement
• 29 Oct 2009: NZ Trade Balance
• 29 Oct 2009: JP Industrial Production
• 29 Oct 2009: US GDP
• 30 Oct 2009: JP BoJ Rate Announcement
By Cindy Stephens, Corporate Dealer
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