The New Zealand dollar hovered just under the US70c mark today, trading in a tight range as markets in the US and Japan were on holiday.
At 5pm today the kiwi was buying US69.67c against US70.07c at Friday's local close, having traded between US69.49c and US69.63c today.
BNZ currency strategist Sue Trinh said the combination of a weaker US dollar and record uridashi and eurokiwi issuance was continuing to underpin the kiwi. Over the past week $1.488 billion of these NZ dollar-denominated bonds had been issued.
The upcoming Reserve Bank meeting could lend further support to the kiwi, with expectations now swinging towards a rate hike.
Deutsche Bank today said there was a greater than 50 percent probability of at least one more rate hike this cycle. The bank forecast a 25 basis point rise later this month and possibily a further 25 basis point rise in December.
"Moreover, whereas we previously forecast a rate cut at the Monetary Policy Statement meeting scheduled for March 2006, we now don't foresee an easing cycle beginning before September of next year," the bank said in a commentary.
A 25 basis point rate rise this month would push the official cash rate up to 7.00 percent, from its current level of 6.75 percent.
On the data front this week, the NZIER Quarterly Survey of Business Opinion is due tomorrow morning and August retail trade figures will be released on Friday.
The following are Reuters currency rates:
NZ dlr US69.67c US70.07c
NZ dlr/Aust dlr A91.95c A92.09c
NZ dlr/euro 0.5746 0.5762
NZ dlr/yen 79.25 79.47
NZ dlr/stg 39.59p 39.47p
NZ TWI 70.73 70.97
Australian dollar US75.77c US76.12c
Euro/US dollar US1.2113 US1.2168
US dollar/yen 113.75 113.37
- NZPA
<EM>Currency:</EM> Kiwi dollar range bound beneath US70C
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