Reuters New Zealand
NZ dollar steadies near 6-month low, bonds firm
Friday July 25, 05:10 PM
WELLINGTON, July 25 (Reuters) - The New Zealand dollar NZD= was little changed on Friday as broad U.S. dollar weakness helped to stem the previous day's losses following an interest rate cut, though the kiwi is seen falling further in the medium term.
The kiwi fell as low as NZ$0.7389 NZD=D4 in late offshore trade on Thursday, its lowest since late January, in the wake of the New Zealand central bank's rate cut to 8 percent. It recovered some of its losses by the start of local trade after weak data sent the U.S dollar lower.
"The kiwi's weakness has been somewhat muted, despite the Reserve Bank's green light for a series of rate cuts, so we think further losses are in train," said RBC Capital Markets senior currency strategist Sue Trinh.
The kiwi was at $0.7420/30 at 0500 GMT, unchanged from late local trade on Thursday. It ranged between $0.7406-$0.7442 in local trade.
The kiwi was knocked off its session highs in line with the neighbouring Aussie dollar AUD=, which fell after major lender National Australia Bank (ASX: NAB.ax) announced it would book losses from its exposure to the U.S. mortgage market. [nSYD337471]
In a statement on Thursday, the Reserve Bank of New Zealand said it expected to cut rates further to support an economy widely seen as already in a recession, provided the kiwi does not fall too sharply.
All 17 analysts in a Reuters poll taken after Thursday's cut expected a further cut at the bank's next meeting on Sept. 11, with 13 of 17 forecasters expecting rates at 7.25 percent by the end of the year.
The U.S. dollar fell against the yen JPY= after U.S. data showed a jump in jobless claims, while home sales tumbled to a 10-year low.
Next week sees domestic trade and building data for June on Monday and Tuesday respectively, and the National Bank's business outlook survey on Thursday.
Bonds extended Thursday's gains as investors factored in rate cuts, with the yield on the benchmark NZ 10-year government bond NZ10YT=RR 3 basis points lower at 6.10 percent. (Reporting by Adrian Bathgate)
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