Kiwi struggled as the PM highlighted the problems inherent with a strong currency

The kiwi dollar came under pressure yesterday following dovish comments from the PM, enabling the pound climb two and a half cents, closing at 2.1845.

  • The kiwi dollar underperformed after the country’s Prime Minister John Key said New Zealand is concerned over the strength of its currency, but has few tools at its disposal to deal with it.
  • The statement concerned investors as it lessened the chance of the RBNZ raising interest rates in the near future as some traders were expecting.
  • In trading this morning the pair are trading steadily around last night’s closing price, with investors now turning their focus the NZ interest rate decision on Wednesday evening.
  • Although rates are likely to hold, the accompanying statement will give policymakers a chance to elaborate on comments made about the relative strength of their currency and enable investors to gauge possible rate movements in the future.