NZ dollar falls as Fed minutes show desire to end QE in 2013
NZ dollar falls as Fed minutes show desire to end QE this year
Jan. 4 (BusinessDesk) – The New Zealand dollar fell below 83 US cents after minutes of the US Federal Reserve’s last policy meeting showed several members favoured an end to quantitative easing this year, earlier than the Fed’s stated timeline of 2015.
The kiwi dollar dropped to 82.89 US cents from 83.21 cents at 5pm in Wellington yesterday. The trade-weighted index was at 74.71 from 74.75.
The greenback strengthened against the euro and US stocks fell after the minutes of the Federal Open Market Committee meeting in December, which confirmed the Fed’s bond buying programme while highlighting concern among some committee members to extend the programme further. Some officials “thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013,” the minutes say.
“That’s quite a contrast to the official line,” said Mike Jones, a strategist at Bank of New Zealand. “It has stoked fears of an early exit from the zero interest rate policy.”
The New Zealand dollar may trade in a range of 82.60 US cents to 83.20 cents today, he said.
The greenback strengthened even though Moody's Investors Service said that agreement on the fiscal cliff won't cut the deficit enough to prevent a downgrade of the American sovereign credit rating. Data pointed to continued improvement in the US economy.
The private sector boosted payrolls by 215,000 in December after adding 148,000 jobs in November, according to the ADP National Employment Report, while initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 372,000 last week, according to Labor Department data.
The kiwi dollar rose to 51.49 British pence from 51.28 pence and traded at 63.37 euro cents from 63.33 cents. It fell to 79.14 Australian cents from 79.36 cents and slipped to 72.46 yen from 72.58 yen.