The New Zealand dollar held its ground against a declining US dollar ahead of a business confidence survey today which is likely to show continued momentum in the local economy.
The kiwi edged up to 86.03 US cents at 8am in Wellington from 85.92 cents at 5pm yesterday. The trade-weighted index was little changed at 80.33 from 80.31 yesterday.
The US dollar index, which measures the greenback against a basket of currencies, continued its decline after a key employment measure published on Friday failed to meet the upbeat expectations of some investors. The kiwi bucked the trend ahead of the New Zealand Institute of Economic Research Quarterly Survey of Business Opinion which is expected to reinforce expectations that more interest rate hikes are on the way to stem inflation pressures emerging from the strengthening local economy.
"Business opinion is the focus today," ANZ Bank New Zealand senior economist Mark Smith and senior foreign exchange strategist Sam Tuck said in a note. "There is likely to be little in this morning's New Zealand Q1 QSBO survey that will stand in the way of the continued withdrawal of monetary stimulus by the RBNZ, with the survey expected to confirm a broadening in the domestic expansion."
The Reserve Bank hiked the benchmark interest rate last month and is expected to raise the rate again this month to prevent inflation accelerating. The QSBO survey is scheduled for release at 10am local time.
