The New Zealand dollar rose to a two-week high on optimism about the appointment of Adrian Orr as next governor of the Reserve Bank, while globally, markets are awaiting a raft of central bank reviews this week.
The kiwi gained to 69.12 US cents as at 8am in Wellington from 68.86 cents late yesterday. The trade-weighted index rose to 73.23 from 72.96.
The kiwi dollar climbed yesterday on news that NZ Superannuation Fund chief Orr had been named RBNZ governor after a unanimous recommendation from the bank board. Meanwhile, the Federal Reserve is expected to hike US interest rates on Thursday morning NZ time and both the European Central Bank and Bank of England have monetary policy decisions due on Thursday, rounding out a week dominated by central bank activity.
"The market reaction seems to imply that Orr will oversee a somewhat less dovish policy than his predecessor, with the RBNZ's current projections not building in a rate rise until 2019," said Nick Smyth, interest rate strategist at Bank of New Zealand, in a note. "It seems a little early to speculate," he wrote. "The RBNZ will also have a committee deciding the OCR, of which the governor will have only one vote (albeit an important one if he can influence the committee's thinking)."
The Fed is expected to hike the fed funds target range by a quarter point to 1.25 percent-to-1.50 percent and "if anything, we think the risks are tilted towards a few participants nudging up their rate forecasts for next year as FOMC members may bump up their forecasts for growth on the back of the recently agreed tax reform plan," Smyth said.
