WELLINGTON, New Zealand--The New Zealand dollar will likely remain rangebound overnight as the market gears up for the Reserve Bank of New Zealand's rate decision early Thursday.
The central bank will likely hold the cash rate at 3.50% when it meets on June 11, according to a Wall Street Journal poll of 16 economists. The median from the poll expects the rate to be unchanged, although it is far from unanimous with six economists picking the central bank to cut to 3.25%. Also, those who expect it to maintain the rate acknowledge a cut is a very real possibility.
James McIntyre, an analyst at Macquarie Securities, expects the RBNZ to stay on hold but quantify an explicit easing bias through a lower 90-day bill track. However, "there is a reasonable risk that the RBNZ could pull the trigger and cut in June," he said.
In late Wellington trading, the New Zealand dollar was at US$0.7183 compared with US$0.7119 late Tuesday, and at A$0.9293 versus A$0.9254 previously.
Sam Tuck, a senior foreign-exchange manager at ANZ Bank, said the fact that it could go either way will increase volatility. "We expect a currency reaction no matter the result, with extreme volatility and lack of liquidity a potential issue for traders. The potential range looks US$0.6900 to US$0.7350," he said.
Write to Rebecca Howard at rebecca.howard
WELLINGTON, New Zealand--The New Zealand dollar will likely remain rangebound overnight as the market gears up for the Reserve Bank of New Zealand's rate decision early Thursday. The central bank will likely hold the cash rate at 3.50% when it meets on June 11, according to a Wall Street Journal poll of 16 economists. The median from the poll expects the rate to be unchanged, although it is far from unanimous with six economists picking the central bank to cut to 3.25%. Also, those who expect it to maintain the rate acknowledge a cut is a very real possibility. James McIntyre, an analyst at Macquarie Securities, expects the RBNZ to stay on hold but quantify an explicit easing bias through a lower 90-day bill track. However, "there is a reasonable risk that the RBNZ could pull the trigger and cut in June," he said. In late Wellington trading, the New Zealand dollar was at US$0.7183 compared with US$0.7119 late Tuesday, and at A$0.9293 versus A$0.9254 previously. Sam Tuck, a senior foreign-exchange manager at ANZ Bank, said the fact that it could go either way will increase volatility. "We expect a currency reaction no matter the result, with extreme volatility and lack of liquidity a potential issue for traders. The potential range looks US$0.6900 to US$0.7350," he said. Write to Rebecca Howard at rebecca.howard
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