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


NZ dollar drops to six-day low as greenback strengthens

NZ dollar drops to six-day low as greenback strengthens on optimism about US economy, tapering

By Tina Morrison

Jan. 9 (BusinessDesk) – The New Zealand dollar dropped to a six-day low in the face of a stronger greenback following a better-than-expected employment report and after confirmation in the Federal Reserve minutes of its last meeting that it plans to continue tapering.

The kiwi slid as low as 82.47 US cents following the 8am release of the Fed minutes from its meeting last month. The local currency was at 82.86 cents immediately before the 8am release from 82.88 cents at 5pm yesterday.

The US dollar index, which measures the greenback against a basket of currencies, extended gains after the Fed minutes allayed fears there may have been dissent amongst officials about plans announced at the last meeting to pull back the central bank’s US$85 billion a month bond buying programme. Investors, buoyed by the earlier release of upbeat ADP employment data, then bought the greenback with more confidence.

“The markets were worried that there might be further conditionality and dissent in those minutes, but there wasn’t”, said Sam Tuck, senior FX strategist at ANZ New Zealand. “What we saw after that was a delayed reaction to the stronger ADP number.

“People had been putting off buying US dollars while those minutes were coming for fear that the minutes would negate some of the positive impact from the ADP and now that the minutes are in line with expectations and people can assume that the Fed, provided the US data continues on trend, will continue to taper, then they are more comfortable acting on the stronger data that occurred earlier in the night.”

The ADP Research Institute report showed US employers added 238,000 payrolls in December, the biggest monthly gain since November 2012 and ahead of expectations for an increase of 200,000.

That buoyed expectations for tomorrow’s release of the key US non-farm payrolls report, which is closely watched by the Fed.

“There’s an expectation that tomorrow’s non-farm payrolls release will be strong and show continued growth in the US economy,” said ANZ’s Tuck.

Today, the Bank of England the European Central Bank are expected to keep interest rates unchanged, although traders will be looking for the ECB to offer some hints of other measures it may take to further stimulate the region’s economy, Kymberly Martin, markets strategist at Bank of New Zealand, said in a note.

The New Zealand dollar pared gains against other currencies following the 8am release of the Fed minutes.

The kiwi dropped to 92.69 Australian cents at 9am in Wellington, from 92.88 cents at 5pm yesterday, fell to 60.80 euro cents from 60.83 cents, slipped to 50.19 British pence from 50.53 pence and weakened to 86.54 yen from 86.93 yen.

The trade-weighted index declined to 78.29 at 9am from 78.50 at 5pm yesterday.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news