NZ dollar little changed after Bernanke says tapering not ‘preset’
By Paul McBeth
July 18 (BusinessDesk) - The New Zealand dollar was little changed in the local trading session after US Federal Reserve chairman Ben Bernanke said any wind-down in the central bank’s money printing programme isn’t a done deal, and will rely on economic data.
The kiwi slipped to 78.61 US cents at 5pm in Wellington from 78.95 cents at 8am, and little changed from 78.70 cents yesterday. The trade-weighted index edged up to 74.65 from 74.50.
Bernanke, in the first day of a two-day testimony to the House of Representatives in Washington, said the pace of the US$85 billion a month in asset purchases is not on a “preset course” but is dependent on the strength of economic data. Traders have been second-guessing whether the Fed will start unwinding the bond buying programme this year as the world’s biggest economy splutters back into life.
New Zealand consumer confidence slipped this month to 119.8 from a three-year high of 123.9 in June in an ANZ-Roy Morgan survey due to rising petrol prices and the threat of rising mortgage rates. The weaker kiwi has prompted traders to price in 45 basis points of increases to the official cash rate as they bet the Reserve Bank might act earlier than indicated. The central bank is expected to keep the key rate at 2.5 percent when it reviews monetary policy next week.
“The Reserve Bank might want to talk interest rates down a bit,” said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. He predicts the local currency will push towards 80.82 US cents, and tough talking from the central bank could turn that around, he said.
The kiwi rose to 85.69 Australian cents from 85.29 cents yesterday after a National Australian Bank survey showed more Australian firms were pessimistic than optimistic.
The local currency gained to 78.69 yen from 78.21 yen yesterday and rose to 60.01 euro cents from 59.88 cents. It fell to 51.77 British pence at 5pm in Wellington from 52.07 pence.