How Low Can Kiwi Go?
Reserve Bank cut the official cash rate by 25 basis points last week.
“While the currency depreciation will provide support to the export and import competing sectors, further depreciation is necessary given the weakness in export commodity prices,”
Mr. Wheeler said yesterday in the statement.
An interest cut would normally deter investors due to lower returns on investments, but Reserve Bank Governor Graeme Wheeler’s policy guidance on the official cash rate (OCR) was perceived as ”moderate” by the markets and analysts, prompting the half-cent rise.
Also, we see signs of weaker Chinese manufacturing activity weighed on commodity prices, denting demand for commodity currencies and raising concern that a slowing Chinese economy will reduce global demand for raw materials
From the technical side:After a continuous decline from Level 0.76-77 Level Zone, we need some stop watch and a slight correction as long the price remains above 0.6520 area. More likely to correct up to the 0.68-9 level with Crossing up 0.6620 area.