NZ Dollar Extends Slide

23:32, 23rd April 2015

(RTTNews) - The New Zealand dollar continued to be weaker against the other major currencies in the Asian session on Friday, as sentiment dampened in response to Reserve Bank of New Zealand Assistant Governor John McDermott comments on Thursday that the bank is unlikely to consider any increase in interest rates at present.

Speaking at a business meeting to the Waikato Chamber of Commerce and Industry about inflation in Hamilton on Thursday, John McDermott said, "Before considering any tightening in monetary policy we would need to be confident that increased capacity utilisation and labour market tightness was generating, or about to generate, a substantial increase in inflation."

"Evidence of weakening demand and domestic inflationary pressures would prompt us to consider lowering interest rates," he said.

The RBNZ is expected to keep the OCR at 3.5 percent in the policy meeting on April 30.

The markets keenly await the meeting of Eurozone officials in Latvia today, although a breakthrough in the negotiations appearing unlikely.

Thursday, the NZ dollar fell 0.97 percent against the U.S. dollar, 1.24 percent against the yen, 1.96 against the euro and 1.25 percent against the Australian dollar.

In the Asian trading today, the NZ dollar fell to a 4-week low of 1.0279 against the Australian dollar and more than a 2-week low of 1.4296 against the euro, from yesterday's closing quotes of 1.0237 and 1.4242, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.05 against the aussie and 1.50 against the euro.

Against the yen, the kiwi dropped to an 8-day low of 90.35 against the yen, from yesterday's closing value of 90.75, respectively. The kiwi may test support near the 87.00 region.

Data from the Bank of Japan showed that an index measuring producer prices in Japan were up 3.2 percent on year in March, standing at 103.0. That was just shy of forecasts for 3.3 percent, which would have been unchanged from the February reading.

For the first quarter of 2015, producer prices were up 3.3 percent on year, slowing from 3.5 percent in the previous three months. They were also down 0.1 percent on quarter after adding 0.2 percent in the three months prior.

The kiwi edged down to 0.7561 against the U.S. dollar, from yesterday's closing value of 0.7588. On the downside, 0.73 is seen as the next support level for the kiwi.

Looking ahead, Japan all industry activity index for February is due to be released at 12:30 am ET.

In the European session, the German IFO business climate index for April is slated for release.

At 4:00 am ET, Swiss National Bank Chairman Thomas Jordan is due to speak at the Swiss National Bank annual shareholder meeting in Berne.

In the New York session, U.S. durable goods orders for March is set to be published.

At 10:30 am ET, Bank of Canada Governor Stephen Poloz will participate in a panel discussion at the Export-Import Bank of the United States in Washington DC.