Reuters New Zealand
NZ dollar steady ahead of rate call, bonds weak
Tuesday July 22, 05:15 PM
WELLINGTON, July 22 (Reuters) - The New Zealand dollar NZD= was little changed against the U.S. dollar on Tuesday as investors bided their time ahead of the central bank's interest rate review on Thursday.
The kiwi hovered in familiar territory just above $0.76 as markets continued to view a potential cut to New Zealand's 8.25 percent official cash rate as a tight call.
The decision is at 9 a.m. local time (2100 GMT).
The kiwi fell to a seven-and-a-half year low against the Aussie dollar NZDAUD=R on differing rate outlooks.
Whether the Reserve Bank of New Zealand moves this Thursday, or waits until its next review in September, rates are set to be cut a number of times by the end of the year, BNZ currency strategist Danica Hampton said.
"With the economy slowing and interest rates likely to head lower, the risks to the New Zealand dollar are to the downside," Hampton said in a note to clients.
In contrast, no change is seen to Australia's 7.25 percent benchmark rate in the foreseeable future.
The kiwi was at $0.7602/06 at 0500 GMT, from $0.7615/19 in late local trade on Monday. The currency kept a tight range between $0.7602 to $0.7617 in Tuesday's local session.
A Reuters poll showed 13 of 17 analysts expect the central bank to wait until September before easing, with the median chance of a cut on Thursday put at 40 percent.
Market pricing sees a 48 percent chance of a cut on Thursday, according to an index compiled by Credit Suisse based on interest rate swaps.
The U.S. dollar was steady as investors awaited financial results from big banks to gauge the state of the credit market.
Government debt softened, following the lead of U.S. Treasuries which edged lower ahead of the bank results. The yield on the benchmark NZ 10-year government bond NZ10YT=RR was 8 basis points higher at 6.18 percent. (Reporting by Adrian Bathgate; Editing by James Thornhill)
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