By ELLEN READ
The New Zealand dollar - and currencies worldwide - are in for a bumpy ride over the next couple of weeks.
Already nervy ahead of next month's much-awaited G7 meeting, the markets will also get interest rate decisions from the local and the United States central banks.
Deutsche Bank said currencies would use the next fortnight as a period of "choppy consolidation" as investors looked to second guess comments from the G7.
Deutsche is picking stable rates from both the Reserve Bank of New Zealand (currently 5 per cent) and the US Federal Reserve (currently 1 per cent).
"With the trade-weighted index still strongly above 66 it will be interesting to see how much the currency features in the RBNZ's commentary. No move will see the kiwi trade lower in the short term," the bank said.
Despite the expected busy markets, not too much should be read into short-term movements.
"We look for volatility rather than direction ahead of the February G7 meeting, expecting the past fortnight's range to contain the [kiwi/US cross]," Westpac senior currency strategist Johnathan Bayley said.
That range has seen the kiwi cover over three cents between 65-68USc.
Finance Minister Michael Cullen waded back into the currency arena this week.
He told a wine industry conference in Wellington yesterday that the kiwi was likely to continue marching higher against the greenback given generalised weakness in the US dollar and a continued out-performance by the local economy.
"Much as I might wish otherwise, there is nothing I can do to alleviate the perception of current sluggishness in the US economy," Cullen said.
The comments were at odds with his statement to the finance and expenditure committee in early November, when Cullen said he was "not without options" to influence the soaring kiwi and the negative impact that had on exporters.
National's deputy finance spokesman John Key said the wine conference speech was a "major retraction" by Cullen.
Bumpy ride looming for kiwi before summit
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