Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ dollar declines after Bernanke says Fed may taper QE

NZ dollar declines after Bernanke says Fed may taper QE on signs of sustained improvement

By Tina Morrison

May 23 (BusinessDesk) - The New Zealand dollar fell after US Federal Reserve Chairman Ben Bernanke said the central bank may taper monthly bond purchases at its next few meetings if it’s confident of sustained gains in the economy.

The kiwi dropped to 80.64 US cents from 81.47 cents at 5pm in Wellington yesterday. The trade-weighted index fell to 76.38 from 76.82 yesterday.

The Dollar Index, a measure of the greenback against a basket of currencies, reached its highest in almost three years as investors anticipate the Fed will start unwinding its US$85 billion a month asset purchase programme. Traders are more upbeat about the prospects of the Fed tapering off QE this year as the world's biggest economy shows signs of improvement.

"The US dollar is strengthening and that is weighing heavily on the kiwi dollar," said Michael Johnston, a senior trader at HiFX. "If they scale back bond purchases it is a sign they are more confident about the economic recovery."

Bernanke told Congress the central bank could slow its money printing programme in the next few meetings and is continuing to assess prospects for the job market.

“If we see continued improvement, and we have confidence that that is going to be sustained, in the next few meetings we could take a step down in our pace of purchases,” he said.

Still, the U.S. economy remains hampered by high unemployment and government spending cuts, and tightening policy too soon would endanger the recovery, Bernanke said.

Steadily improving data from the US will likely continue to weigh on the kiwi although it may bounce higher should some reports fail to meet expectations, said HiFX's Johnston.

The kiwi has got further to fall," Johnston said. "We should see sub-80 before the end of the year."

Minutes released by the Fed of its last policy meeting showed many officials said more labour-market progress was needed before they slow asset purchases.

Traders will also be keeping tabs on the release today of the HSBC flash purchasing managers’ index, an early indicator of China’s manufacturing, to get a steer on how the world’s second biggest economy is faring.

The local currency was little changed at 83.22 Australian cents, from 83.29 yesterday. It dropped to 82.92 yen from 83.56 yen yesterday and fell to 62.74 euro cents from 63.06 cents. The kiwi weakened to 53.61 British pence from 53.78 pence yesterday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news