The New Zealand dollar, which fell to a four-year low after the Reserve Bank last week dropped its tightening bias and opened the door to possible rate cuts, may continue its decline this week.
The kiwi may trade between 70 US cents and 74.90 cents, according to a BusinessDesk survey of 12 currency traders and strategists. Seven expect the currency to gain, while two say it may rise and three bet it will remain broadly unchanged. It was recently trading at 72.64 US cents.
The New Zealand dollar fell sharply last week after Reserve Bank governor Graeme Wheeler said future interest rate moves could be up or down, removing his previous bias for higher rates. Some traders are now betting that the next move will be a cut and this sentiment could be strengthened should the Reserve Bank of Australia lower interest rates at its meeting tomorrow. Traders are currently pricing in a 69 per cent chance of an Australian cut tomorrow, according to the Overnight Swap Curve.
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"Heading into the early part of the week, it looks to me as though we may just see some ongoing momentum from the big declines we saw last week and that may be added to if we see the Reserve Bank of Australia cut interest rates tomorrow," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "There may be some spillover effect into the kiwi. We might just see people beginning to wonder if the RBNZ might ultimately move to an easing bias as well if global pressures continue."