Moves in the euro, yen and dollar were limited, with investors eyeing the chances of a shift in the Bank of Japan’s policy toolkit and a U.S. Federal Reserve statement that points more clearly to a rise in interest rates this year. If the Bank of Japan does fulfil the market’s expectations, the yen will sink and the U.S. dollar will rise sharply at its expense, which will affect the dollar on the market in general, and probably versus the shekel as well. The trade-weighted index declined to 77.73 from 77.99. The dollar maintained gains as trading got under way for the week, with investors digesting stronger-than-expected U.S. inflation data ahead of a raft of central bank meetings.
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The uncertainty surrounding the timing of another rate hike in the United States helped keep the local stock market in the negative territory last week.
“The NZ dollar has continued to appreciate since the August MPS and remains above the bank’s TWI assumed levels, despite these being significantly revised upwards”, ASB economist Daniel Snowden said. The U.S. non farm payrolls (NFP) report has been the strongest pillar to prove the recovery of the U.S. economy, but at near full employment it has ceased to be most important indicator the Fed looks at. It is expected to reiterate that sentiment on Thursday.
Data expected on Monday includes a report on the USA housing market that is likely to show housing starts fell to a 1.19 million-unit rate in August from a 1.21 million-unit pace in the previous month.
USA industrial production fell 0.4% in August, twice as much as economists had expected, while retail sales excluding automobiles fell 0.1% against expectations of a 0.2% gain.
In the eurozone, Frankfurt’s DAX 30 won 0.7 percent and the Paris CAC advanced 1.3 percent.
The appearance of the word “fiscal stimulus” has become more often lately and its frequency surpassed “quantitative easing” for the first time since August 2010, giving us some hints as to what the market is expecting. The economy expanded 3.6% in the year. Among other precious metals, spot silver rose 2.8% to $19.18 an ounce, while platinum gained 0.3% to $1,018.00, off Friday’s 2-and-a-half-month low of $1,005.
The PSEi lost another 28.03 points or 0.37% to settle at 7,553.76 on Friday, as investors cashed in earlier gains amid the uncertainty over the FOMC meeting as well as the geopolitical concerns arising at home.
The local currency fell to 96.91 Australian cents from 97.21 cents on Friday in Wellington and fell to 4.8483 yuan from 4.8749 yuan. “The kiwi will probably range-trade ahead of the BOJ, then the Fed, then the RBNZ”.
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New Zealand’s two-year swap rate fell two basis points to 2.04% and 10-year swaps fell one basis point to 2.59%.
