Forex News: NZ Dollar Falls Amid RBNZ Rate Cut Speculation

NZ Dollar Falls Amid RBNZ Rate Cut Speculation

(RTTNews) - The New Zealand dollar weakened against other major currencies in the European session on Tuesday, as traders speculate the Reserve Bank of New Zealand or RBNZ is likely to slash its official cash rate in its upcoming monetary policy meeting due this week.

The Official Cash Rate (OCR) is anticipated to be lowered by 25 basis points to 2.25 percent by the RBNZ at its November policy meeting on Thursday.

Citing worries about New Zealand's delayed economic recovery, some experts demand for a larger 50 bps drop.

The RBNZ cut the OCR by 50bps to 2.50 percent at its most recent meeting on October 8 and emphasized that it "remains open to further reductions in the OCR."

Markets have more than fully priced in a 25bps drop this week and a 50% chance of a final 25bps decrease in the following six months to 2.00%.

The Monetary Policy Statement for November will be the ultimate one of the years and the last issued by acting Governor Christian Hawkesby before Anna Breman takes over in December.

The focus will be on the central bank's predictions and press conference, as well as how much room there is for another rate decrease if necessary next year.

In the European trading today, the NZ dollar fell to a 4-day low of 0.5593 against the U.S. dollar, from an early 5-day high of 0.5622. The kiwi is likely to find support around the 0.54 region.

Against the yen and the euro, the kiwi slid to 4-day lows of 87.50 and 2.0606 from early highs of 88.06 and 2.0506, respectively. If the kiwi extends its downtrend, it is likely to find support around 86.00 against the yen and 2.07 against the euro.

Against the Australian dollar, the kiwi edged down to 1.1533 from an early high of 1.1507. On the downside, 1.16 is seen as the next support level for the kiwi.

Looking ahead, Canada wholesale sales data for October, U.S. ADP employment data, PPI for September, retail sales data for September, U.S. S&P/Case-Shiller home price index for September, U.S. business inventories for August, U.S. Consumer Board's consumer confidence for November, U.S. pending home sales for October, U.S. Richmond Fed manufacturing index for November and U.S. Dallas Fed services index for November, are slated for release in the New York session.

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