RBNZ Warning Sees NZD/USD Drop below 0.86


New Zealand’s dollar slid the most in six months after its central bank warned of the potential for a “significant fall” in the kiwi. Australia’s currency rose to a three-week high as Chinese manufacturing beat estimates.

The kiwi weakened by at least 0.6 percent against all 16 major peers after Reserve Bank Governor Graeme Wheeler said its level is “unjustified and unsustainable” and signaled a pause in monetary tightening following the fourth interest-rate increase this year. The euro matched its lowest level since November before data predicted to show a slowing in manufacturing growth. The yen remained weaker after a report showed exports unexpectedly declined.

“Some slightly stronger words on the exchange rate have taken the market a bit off guard, so you will get a flush out of some longs in the kiwi dollar,” said Michael Turner, a debt and currency strategist at Royal Bank of Canada in Sydney. “They’ve given themselves plenty of flexibility and plenty of opportunity to jawbone the currency further in the near term.”

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