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

 


NZ dollar little changed on fed tapering, GDP looms

NZ dollar little changed after Fed starts modest tapering as NZ GDP looms

By Tina Morrison

Dec. 19 (BusinessDesk) – The New Zealand dollar was little changed after the Federal Reserve decided to push the button on a long-awaited reduction of its monetary stimulus programme which has weakened the greenback.

The kiwi was little changed at 82.47 US cents at 8:10am in Wellington, following the 8am statement, from 82.50 cents at 5pm yesterday. The trade-weighted index slipped to 77.69 from 77.78 yesterday.

The Fed said it would reduce its 15-month-old asset purchase programme by US$10 billion to US$75 billion a month in light of improving labour market conditions that suggest better prospects for the world’s largest economy. Still, the Fed reiterated that interest rates would remain near zero, contrasting with New Zealand where rates are set to start rising early next year.

“I really don’t think the kiwi is going to take a big dive here,” said Stuart Ive, senior advisor at OMF. “They have reiterated that they are not going to be in any rush to raise interest rates. They will take this gently go-lightly approach to unwinding.”

“This is not tightening, they are still stimulating their economy by US$75 billion per month and not raising interest rates is still a form of stimulus,” Ive said. “The US is still very much in a stimulative stage whilst we are not and on that basis alone, that will be supporting the kiwi/US. We will certainly be raising rates long before the US will be.”

Investors will now be looking ahead to a 10:45am report on New Zealand's third-quarter gross domestic product, which is expected to show quarterly growth of 1.1 percent.

The Fed said it was likely to remain appropriate to keep interest rates near zero well past the time the jobless rate falls below 6.5 percent. The bank had previously committed to keeping benchmark credit costs steady at least until the jobless rate hit 6.5 percent. In November, the unemployment rate was at a 5-year low of 7 percent.

The Fed lowered its expectations for inflation and unemployment over the next few years.

The Fed was forecast to start curtailing its monthly bond purchases this week after unexpectedly refraining from reducing them in September, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 survey.

“The market is pleased to get the cat out of the bag, it is quite a relief we know the path now,” said OMF’s Ive. “But equally we are not going to see these massive falls that some people predicted.”

The New Zealand dollar edged lower to 59.81 euro cents at 8:10am from 59.90 cents at 5pm yesterday. The kiwi weakened to 50.20 British pence from 50.65 pence yesterday after a report showed unemployment dropped to 7.4 percent, edging closer to the Bank of England’s 7 percent threshold, raising it may have to raise interest rates sooner. The local currency advanced to 85.12 yen from 84.98 yen yesterday after a report showed Japan’s trade deficit widened to a record.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Post-Post: Brian Roche To Step Down As NZ Post CEO

Brian Roche will step down as chief executive of New Zealand Post in April 2017, having led the state-owned postal service's drive to adjust to shrinking mail volumes with a combination of cost cuts, asset sales, modernisation and expansion of new businesses. More>>

ALSO:

Company Results: Air NZ Rides The Tourism Boom With Record Full-Year Earnings

Air New Zealand has ridden the tourism boom and staved off increased competition to deliver the best full-year earnings in its 76-year history. More>>

ALSO:

New PGP: Sheep Milk Industry Gets $12.6M Crown Funding

The Sheep - Horizon Three programme aims to develop "a market driven, end-to-end value chain generating annual revenues of between $200 million and $700 million by 2030," according to a joint statement. More>>

ALSO:

Half Full: Fonterra Raises Forecast Milk Price

Fonterra Co-operative Group Limited today increased its 2016/17 forecast Farmgate Milk Price by 50 cents to $4.75 per kgMS. When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $5.25 to $5.35 before retentions. More>>

ALSO:

Keep Digging: Seabed Ironsands Miner TransTasman Tries Again

The first company to attempt to gain a resource consent to mine ironsands from the ocean floor in New Zealand's Exclusive Economic Zone has lodged a new application containing fresh scientific and other evidence it hopes will persuade regulators after their initial application was turned down in 2014. More>>

Wool Pulled: Duvets Sold As ‘Premium Alpaca’ Mostly Sheep’s Wool

Rotorua business Budge Collection Limited (Budge) and sole director, Sun Dong Kim, were convicted and fined a total of $71,250 in Auckland District Court after each pleading guilty to four charges of misrepresenting how much alpaca fibre was in their duvets. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news