The New Zealand dollar closed lower in Wellington today ahead of tomorrow's Official Cash Rate (OCR) review after losing ground on weaker than expected trade data and a softer aussie .
The kiwi closed at US68.07c this evening from US68.20c at 8.30am and US68.36c at 5pm yesterday having traded in the US67.90c to US68.33c range."
An Auckland dealer said the kiwi was came "off a little bit on the back of the trade numbers".
This morning it was reported that soaring oil prices, a continued spend-up on imported consumer goods and deteriorating exports as a result of an over-valued currency had sent the trade deficit soaring to $522 million in June.
Economists had forecast a $422m deficit -- hoping exports would rebound from the May drop -- but a bounce failed to materialise.
The annual deficit in the June year of $5.176 billion is the worst on record in nominal terms.
But aside from that, the kiwi had also been dragged lower a softer aussie and euro the dealer said.
At 5pm in Wellington the Australian dollar was buying US75.54c (US76.03c at 5pm yesterday) while the euro was at US$1.2008 (US$1.2044).
The dealer said the kiwi's move lower today would probably have been larger if it wasn't for tomorrow morning's OCR review.
Economists universally expect bank Governor Alan Bollard to leave the cash rate unchanged tomorrow but the market is more interested in how hawkish the tone of his statement will be.
With inflation still hovering around the top of the bank's 1-3 per cent inflation band, and expected to remain there for at least a year, most expect Dr Bollard to talk tough again.
Elsewhere, the US dollar continued to firm today after China's central bank played down talk of further upward revaluation of the yuan soon, although gains were tempered by weaker-than-expected US consumer confidence.
By 5pm the US dollar was trading at 112.74 yen (111.87).
On its crosses, the kiwi was buying A90.12c (A89.95c), 0.5670 euro (0.5678), 39.20 British pence (39.24), 0.8862 Swiss francs (0.8869) and 76.74 yen (76.49).
Elsewhere, the TWI was at 69.27 (69.32) and the monetary conditions index was on plus 969 (975).
On the money market, 90-day bank bill yields were at 7.03 per cent (7.04), July 2009 bond yields were at 5.81 per cent (5.83), and April 2015s were at 5.78 per cent (5.79).
- NZPA
<EM>Currency:</EM> Soft trade data weighs on kiwi
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