NZ dollar rises to 2-month high vs. pound after report shows no British inflation
The New Zealand dollar rose to a two-month high against the pound after a report showed Britain had no inflation last month, stoking speculation the Bank of England won't raise interest rates any time soon.
The kiwi hit 51.54 British pence and was trading at 51.50 pence at 8am in Wellington, from 51.10 pence at 5pm yesterday. The local currency advanced to 76.46 US cents from 76.28 cents yesterday.
The pound weakened after data showed British annual inflation hit zero for the first time on record in February, from a 0.3 percent pace in January, raising speculation it could dip below zero next month. The longer inflation stays below the Bank of England's 2 percent target, the less likely it is that the bank will raise interest rates any time soon.
"The news suggests that price pressures in UK remain non existent for the time being, leaving BoE on hold for the foreseeable future," Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said in a note. The pound "tumbled...in the aftermath of the release as traders pared any expectation of rate hikes to 2016."
In New Zealand today, traders will be eyeing the release of Fonterra Cooperative Group's first-half earnings for an update on the dairy exporter's forecast payout to farmers. Separately, trade data for February is also scheduled for release.
The New Zealand dollar was little changed at 97.18 Australian cents from 97.22 cents yesterday ahead of the release of the Reserve Bank of Australia's financial stability report today.
The kiwi advanced to 70.02 euro cents from 69.93 cents yesterday and gained to 91.50 yen from 91.38 yen yesterday. The trade-weighted index increased to 79.63 from 79.53 yesterday.