The New Zealand dollar weakened against the other major currencies in the Asian session on Monday, as some economist bet that the Reserve Bank of New Zealand may cut its key interest rate in the upcoming monetary policy meetings.
ANZ Bank New Zealand Ltd. and First NZ Capital Ltd. has joined five other banks in forecasting that RBNZ is likely to cut its Official Cash Rate at the upcoming meetings scheduled for both June and July. Some forecast about 50 basis points of cuts over the coming months from 3.5 percent.
The next RBNZ monetary policy meeting is due on June 11.
Meanwhile, the Reserve Bank signaled at the April meeting that interest rate hikes were off the table. Also, it will observe conditions that could prompt a rate cut.
China, which is New Zealand’s largest trading partner, announced additional easing on Sunday. The People’s Bank of China (PBoC) said it would cut the benchmark one-year lending rate by 0.25 percentage points to 2.25 percent, effective Monday following Saturday’s soft trade and inflation numbers for April. The soft data signaled the China may struggle to meet its official growth target of about 7 percent.
The monetary easing measure of PBOC, also weighed on the NZ dollar.
Friday, the NZ dollar showed mixed trading against its major rivals. While the NZ dollar rose against the euro and the Australian dollar, it fell against the U.S. dollar. Against the yen, the kiwi held steady.
In the Asian trading today, the NZ dollar fell to nearly a 3-1/2-month low of 1.0696 against the Australian dollar, from Friday’s closing value of 1.0577. On the downside, the kiwi may test support near the 1.09 region.
Against the yen and U.S. dollar, the kiwi slipped to near 2-month lows of 88.53 and 0.7385 from last week’s closing quotes of 89.69 and 0.7489, respectively. If the kiwi extends its downtrend, it is likely to find support around 87.00 against the yen and 0.71 against the greenback.
The kiwi edged down to 1.5113, from Friday’s closing value of 1.4954. It may test support near the 1.55 region.
Looking ahead, the Bank of England will announce its interest rate decision at 7:00 am ET. Economists expect the bank to retain interest rates unchanged at 0.50 percent and asset purchase target at GBP 375 billion.
In the New York session, U.S. labor market conditions index for April is due to be released.
At 9:00 am ET, Eurogroup meetings is scheduled to be held in Brussels.
The material has been provided by InstaForex Company – www.instaforex.com