The dollar enjoyed a run against the pound after May's botched election. Photo / AP
The dollar enjoyed a run against the pound after May's botched election. Photo / AP
The New Zealand dollar fell from a three-month high against the pound after stronger-than-expected UK inflation weakened the case for further Bank of England rate cuts and was little changed against the greenback ahead of the Federal Reserve statement and domestic growth data.
The kiwi fell to 56.57 British penceas at 8am in Wellington from 57.12 pence late yesterday. It traded at 72.20 US cents from 72.24 cents.
In the UK, the core consumers price index rose 2.6 per cent in May from a year earlier, beating forecasts of a 2.3 per cent increase, and helping lift the pound, which has been weaker since the inconclusive election left Prime Minister Theresa May without a clear majority. The kiwi is holding near its highest levels in almost four months against the US dollar on speculation the Fed will hike the fed funds rate a quarter point this week without giving the market enough reassurance that it will deliver a second increase this year.
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"The market is positioned for a 'dovish hike' by the Fed so we think the balance of risk post the meeting is for upside to US rates and the USD," said Jason Wong, currency strategist at Bank of New Zealand, in a note.
Ahead of the Fed announcement tomorrow morning New Zealand time, Statistics New Zealand releases balance of payments data for the first quarter today, which is expected to show the current account deficit unchanged at 2.7 per cent of gross domestic product. Food prices and housing data for May are also out today and GDP data tomorrow is expected to show the economy sped to a 0.7 per cent pace in the first quarter for an annual rate of 2.7 per cent.
The kiwi rose to 95.74 Australian cents from 95.59 cents. It fell to 4.9062 yuan from 4.9089 yuan and traded at 79.42 yen from 79.46 yen. It declined to 64.37 euro cents from 64.52 cents. The trade-weighted index was at 77.68 from 77.71.
