The New Zealand dollar dipped today against the US dollar on a lower than expected June quarter Consumers Price Index (CPI) figure.
Statistics New Zealand said this morning the CPI remained unchanged in the June quarter, bringing the annual rate of inflation down to 1.5 per cent. A 0.4 rise for the quarter had been expected by most economists.
A Deutsche Bank currency dealer said the kiwi, which traded in a range today of US58.26c to US58.83c, responded almost immediately to the news.
"We started off at the highs and pretty much the sole influence on trading really was the CPI that came in on the low side," he said.
"There was some obvious reaction to that. Initially we moved from about US58.80c and we lost about 20 points straight away. We pretty much spent the rest of the day drifting off."
The lower CPI increases the perceived likelihood of a bigger rate cut by the Reserve Bank next week " and the currency came off accordingly", the dealer said.
However the dealer said the kiwi had been "a little bit overdone on the downside" following the CPI.
Tonight he expected the kiwi to trade in a US58.10c to US59c range.
Influencing the kiwi tonight will be news from the US where Federal Reserve chairman Alan Greenspan is to give monetary testimony, widely expected to be optimistic.
The kiwi ended up buying US58.37c at 5pm today, down from US58.86c at yesterday's close, while the Australian dollar was at US65.54c (US65.75c yesterday).
By 5pm in Wellington, the euro weakened to US$1.1264 from yesterday's US$1.1277, while the US dollar was at 117.66 yen (117.65).
Against the key crosses at 5pm, the kiwi was buying A89.05c (A89.54c yesterday), 0.5183 euro (0.5221), 68.68 yen (69.26), 36.24 pence (36.15), and 0.8037 Swiss francs (0.8101).
The Australian dollar was buying $1.1229, from $1.1167 yesterday.
The monetary conditions index was at plus 257 (299), the trade-weighted index was at 62.41 (62.90), and 90-day bank bill yields were at 5.12 per cent (5.11).
On the bond market, the February 2005 yields were at 4.80 per cent (4.80), November 2006s were at 4.96 per cent (4.96), and the November 2011s were at 5.36 per cent (5.32).
- NZPA
<i>Currency:</i> Kiwi dips on CPI data
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