CANBERA (dpa-AFX) - The New Zealand dollar weakened against most major currencies in the European session on Monday, following a drop in global commodity prices in June.
The impact of lessening Middle East tensions and lower oil prices on New Zealand's export commodities is reflected in the 1% drop in the ANZ Commodity Price index in June, which weighs down the Kiwi.
Investors are concentrating on the Reserve Bank of New Zealand's (RBNZ) impending policy announcement.
ANZ shares anticipate that the RBNZ will increase the OCR by 25 basis points to 2.5% the following week. Despite the recent drop in oil prices, the bank feels that ongoing inflation risks and the weakness of the domestic currency warrant additional policy tightening.
As markets continue to factor in many Federal Reserve (Fed) rate increases by the end of the year, the US dollar is receiving support. The Fed's June Meeting Minutes and the Institute for Supply Management's (ISM) Services Purchasing Managers Index (PMI), which are scheduled for later in the day, are now anticipated by investors as new indicators of the direction of US monetary policy.
In the European trading today, the NZ dollar fell to 4-day lows of 0.5680 against the U.S. dollar and 2.0111 against the euro, from early highs of 0.5704 and 2.0059, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.55 against the greenback and 2.02 against the euro.
Against the Australian dollar, the kiwi dropped to a 5-day low of 1.2201 from an early high of 1.2163. The kiwi may test support near the 1.23 region.
Meanwhile, the kiwi rose to 4-day high of 92.35 against the yen, from early low of 91.96. The kiwi is likely to find resistance around the 94.00 region.
Looking ahead, Canada and U.S. PMI reports for June are slated for release in the New York session.
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