The New Zealand dollar rose from a four-month low ahead of Reserve Bank governor Adrian Orr's first monetary policy statement, which is under close scrutiny for any deviation from the previous leadership.
The kiwi gained to 69.81 US cents as at 8am in Wellington from 69.64 cents yesterday. The trade-weighted index increased to 73.24 from 73.13.
Orr is expected to keep the official cash rate at 1.75 per cent, with the future track likely to remain flat as inflation remains subdued with the RBNZ's survey of expectations this week showing firms didn't expect consumer prices to rise quickly. Still, the currency is tracking below the Reserve Bank's projections and oil prices have been rising, meaning there's scope for tradeable inflation to start creeping back into the economy. Traders are focusing on Orr's tone and style of delivery, which is an unknown quantity, at the press conference, select committee hearing, and subsequent media interviews.
"Although the RBNZ is widely expected to maintain rates, governor Orr will be watched closely, and volatility could be elevated given the uncertainties," ANZ Bank New Zealand chief economist Sharon Zollner and economist Daniel Wilson. "A hawkish surprise seems unlikely, but if there is any shift in bias it will likely have some legs as it may be viewed as a new trend under new leadership and targets."
The greenback was flat in Northern Hemisphere trading, while Brent Crude oil prices rose 3.2 percent to US$77.24 a barrel in response to US President Donald Trump's decision to withdraw from the Iran deal and re-impose sanctions on the Middle East nation.
