He said while interest rate markets are now pricing in a rate hike in Australia in June next year to 1.75 per cent versus a lift in New Zealand in August 2018 to 2.00 per cent, both are unlikely. However, "on relatively market pricing, the market is thinking they (Australia) will go before us," he said.
He said there was little or no reaction after the Bank of Japan pushed back its projected timing to hit its 2.0 per cent inflation goal, with the kiwi trading at 82.32 yen from 82.38 yen. The BOJ now says 2 per cent may not be reached for three more years.
Speizer said the European Central Bank decision later in the global trading day could cause more volatility. "They might talk about tapering their bond purchase program. That's the big thing to watch for," he said. ECB President Mario Draghi surprised markets in a late June speech when he indicated the bank would slowly start winding down the programme.
The trade-weighted index was little changed at 77.82 from 77.86 yesterday. The kiwi traded at 56.40 British pence from 56.42 pence and at 63.80 euro cents from 63.73 cents and was at 4.9681 yuan from 4.9680 yuan.
New Zealand's two-year swap rate rose 5 basis points to 2.23 while the 10-year swaps rose 5 basis points to 3.31 per cent.
