New Zealand dollar traded little changed against its US rival on Wednesday, after having distanced from eight-week lows earlier, after Reserve Bank of New Zealand Governor Graeme Wheeler said that the kiwi dollar could appreciate once the central bank begins raising borrowing costs next year.
NZD/USD rallied to a session high at 0.8239 at 2:00 GMT, after which consolidation followed at 0.8215, losing 0.09% for the day. Support was likely to be received at September 15th low, 0.8134, while resistance was to be seen at October 31st high, 0.8310.
In its semi-annual Financial Stability Report, the Reserve Bank of New Zealand (RBNZ) stated that a decrease in building approvals and a drop in attendance at open homes could be considered as evidence, that the restraints on low-deposit lending were “starting to affect the housing market” in the country.
RBNZ Governor Graeme Wheeler said that interest rates would begin being raised next year, as the rate of inflation was accelerating. “The concern will be that the interest differential between New Zealand and any of the advanced economies will widen,” Wheeler told a parliamentary committee in Wellington earlier today, cited by Bloomberg News. “That could increase pressure on the exchange rate.”
Meanwhile, most recent economic data, released out of the United States, including non-farm payrolls and Gross Domestic Product, added to the case that tapering of stimulus may occur soon. Federal Reserve Bank policymakers will probably reduce the monthly pace of asset purchases to 70 billion USD at central bank’s policy meeting on March 18th-19th from the current pace of 85 billion USD, according to the median estimate of 32 respondents in a survey, conducted by Bloomberg on November 8th.
However, Federal Reserve President for Atlanta Dennis Lockhart said on Tuesday that overall economic situation in the United States remained mixed, as concerns persisted that expectations of a stronger economic growth next year will probably not be met. According to Lockhart, it was difficult to assess whether economic development was in a positive or a negative manner, with overall state pointing a weak growth.
Elsewhere, the kiwi was steady against the euro, with EUR/NZD cross dipping 0.02% on a daily basis to trade at 1.6343 at 9:42 GMT. AUD/NZD pair was losing 0.10% to trade at 1.1308 at 9:44 GMT.