The New Zealand dollar weakened against the other major currencies in the Asian session on Wednesday, as traders await the Reserve Bank of New Zealand’s interest rate decision and Governor Graeme Wheeler’s press conference on Thursday.
In the last monetary policy meeting on January 28, the RBNZ maintained benchmark interest rates on hold at 3.50 percent. But, Wheeler changed his stance regarding the previous statement of keeping the rate at current levels “for some time” into the possibility of a cut or hike if needed.
He also hinted earlier that the currency is still overvalued.
Few traders are pricing for a rate cut tomorrow as a strong currency and cheap oil feed into sluggish inflation. Therefore, they expect the Reserve Bank Governor Graeme Wheeler to loosen monetary policy to get the consumers price index up.
Meanwhile, data from the National Bureau of Statistics showed that China’s industrial production and retail sales growth slowed more than expected in February. Industrial production increased 6.8 percent year-on-year in January to February, while it was forecast to grow 7.7 percent. In December, production advanced 7.9 percent.
During January to February, retail sales grew at a pace of 10.7 percent, slower than a 11.9 percent rise seen in December. Sales were expected to rise 11.6 percent.
Tuesday, the NZ dollar fell after the government announced threats to contaminate infant formula with poison, raising concerns the action may hurt sales of dairy products, the nation’s biggest commodity export.
The kiwi fell 1.08 percent against the U.S. dollar, 1.10 percent against the yen and 0.47 percent against the euro on Tuesday.
In the Asian trading today, the NZ dollar fell to more than a 5-week low of 0.7229 against the U.S. dollar and a 4-week low of 87.80 against the yen, from yesterday’s closing quotes of 0.7270 and 88.08, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.70 against the greenback and 86.12 against the yen.
Pulling away from an early 5-day high of 1.4662 against the euro, the kiwi edged down to 1.4761. The pair was trading at 1.4708 at yesterday’s close. On the downside, 1.49 is seen as the next support level for the kiwi.
The kiwi edged down to 1.051 against the Australian dollar, from yesterday’s closing value of 1.0475. The kiwi may test support near the 1.08 region.
Looking ahead, U.K. industrial and manufacturing production for January is slated for release in the European session.
At 4:00 am ET, European Central Bank President Mario Draghi will deliver a speech at the ECB and its Watchers XVI Conference organized by the Center of Financial Studies in Frankfurt. Other ECB policymakers Peter Praet, Erkki Liikanen and Ewald Nowotny will also be speaking at the event.
In the New York session, U.S. crude oil inventories report for the week ended March 6 is set to be released.
At 11:00 am ET, Bank Of England MPC External Member Martin Weale is expected to speak at the City and Islington Sixth Form College in London.
The material has been provided by InstaForex Company – www.instaforex.com