The New Zealand dollar is trading near its lowest levels in almost 19 months after falling below 69 US cents for the first time since June 2016, while 90-day bank bills fell to a record low and swap rates declined, as sentiment was dented by weaker commodity prices and a central bank disinclined to raise interest rates.
The kiwi dollar traded at 68.06 US cents as at 8am in Wellington, having fallen as low as 67.79 cents in New York on Friday, from 68.58 cents in Wellington at the end of last week.The trade-weighted index was at 72.15, having sunk to 71.90 on Friday in New York, also about a 19-month low.
Fonterra Cooperative Group heads into this week's GlobalDairyTrade auction after three consecutive declines in dairy product prices while the CRB Index of 19 commonly traded commodities fell 2 percent last week.
While a weaker kiwi dollar brings with it the prospect of a revival in tradables inflation and the TWI is well below the 73.5 average level the Reserve Bank is projecting for the fourth quarter the bank's latest forecasts have only two rate hikes flagged by December 2020, while the Federal Reserve is expected to hike next month. The 90-day bank bill rate fell to a record 1.91 percent on Friday while two-year swaps fell to a two-week low of 2.14 percent.
"Key support for NZD/USD around 0.6820 gave way to end the week, and it quickly made new lows for the year," said Con Williams, rural economist at ANZ Bank New Zealand, in a note.