Mike Shirley, a dealer at Kiwibank, says the market traded a 30-point range through most of the day and gradually retraced its losses in New York on Friday when conflicting statements about tariff removal were flying in the context of an expected preliminary trade deal between the US and China.
Global markets had been buoyed last Thursday when a Chinese official said Beijing and Washington had agreed to lift existing tariffs but then US President Donald Trump said he hadn't agreed to lift tariffs on Chinese goods.
Given the length of the trade war – it has been waged hot and cold and back again since early last year, "it's almost like some terrible comedy," Shirley says.
Markets were subdued with the US bond market closed tonight for the US Veteran's Day holiday.
The RBNZ's monetary policy committee will meet on Wednesday to decide what to do with the official cash rate.
According to a Bloomberg survey, 15 out of 21 economists are predicting the bank will cut the OCR to 0.75 per cent from 1 per cent currently while the other six are expecting no change.
"As we draw closer to the RBNZ decision, we're likely to see positioning flows. It still feels very much like a line-ball call with a mild skew to a cut," Shirley says.
The market had priced in about a 65 per cent chance of a cut early this morning and that has ebbed to just above 60 per cent now.
The New Zealand dollar was trading at 92.56 Australian cents from 92.05, at 49.61 British pence from 49.40, at 57.56 euro cents from 57.32, at 69.19 Japanese yen from 69, and at 4.4413 Chinese yuan from 4.4209.
The two-year swap rate edged up to a bid price of 1.0550 per cent from 1.0490 per cent on Friday while 10-year swaps rose to 1.5325 per cent from 1.5250 per cent.
