By: Barbara Zigah
In New Zealand, the Kiwi Dollar traded higher versus the U.S. Dollar, striking a 27-month peak as investors move to position themselves in advance of this week’s Federal Open Market Committee meeting which concludes on Wednesday.
As reported at 4:30 p.m. (NZDT), the New Zealand Dollar traded as high as US$0.7672 before slipping back to US$0.7664, off of Friday’s late trade of US$0.7539. Analysts speculate that whetted risk appetite is driving the demand for the New Zealand Dollar, and that this weeks’ round-up of central bank meetings, including one in Australia, will keep it busy.
While the outcome of the Federal Reserve’s meeting on Wednesday is practically a foregone conclusion, less clear is the Reserve Bank of Australia’s meeting tomorrow. While the majority of analysts don’t expect to see any change in interest rates, one foreign exchange manager in New Zealand noted that they (meaning the RBA) do have a tendency of surprising the financial markets, and he predicts that there is a 50-50 chance that the RBA will hike interest rates. Should they raise their cash rate from the current 4.5%, it will likely be seen as a preemptive measure to stave off predicted inflationary pressures.