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

 


NZ dollar drops after Fed signals US economic recovery ahead

NZ dollar drops after Fed signals US economic recovery ahead, driving greenback demand

By Tina Morrison

March 20 (BusinessDesk) – The New Zealand dollar dropped almost three-quarters of a US cent after the Federal Reserve raised its projections for future US interest rates, signalling it sees recovery ahead for the world’s largest economy and spurring demand for the greenback.

The kiwi dropped to 85.51 US cents at 8am, from 86.21 cents immediately before the Fed’s 7am statement, and down from 86.10 cents at 5pm yesterday. The trade-weighted index fell to 80.07 from 80.22 yesterday.

The Fed, in its first meeting under new chair Janet Yellen, raised its projections for the future path of the Fed funds rate by 25 basis points to 1 percent by the end of 2015 and by 50 basis points to 2.25 percent by the end of 2016. It previously expected the rate to be 0.75 percent by the end of 2015 and 1.75 percent the following year. The move toward a more restrictive interest rate path ahead has turned investor attention to the attractiveness of US assets, and boosted demand for the US dollar.

“The increase in the expected path of rates, even though it’s a long way out, is above where the market was, and it’s encouraged the market to be betting on a US recovery,” said ANZ Bank senior FX strategist Sam Tuck. “By increasing those forecast projections, implicitly the Fed is forecasting the US economy to recover and rates to normalise faster than they were in December, which has driven the US dollar stronger.”

Still, Yellen stressed the Fed’s future track remained dependent on improving economic data, Tuck said.

Following its two-day meeting, the Fed pulled back its economic stimulus programme by US$10 billion, as expected. The Fed will buy US$55 billion of bonds in April, down from US$65 billion in March and US$85 billion in December.

Later today, the focus will turn to Philadelphia Fed Business Outlook Survey and US existing home sales.

In New Zealand today, traders are awaiting fourth quarter data for gross domestic product, scheduled for release at 10:45am. GDP probably rose 0.9 percent in the final three months of 2013, based on a Reuters survey of 11 economists.

The New Zealand dollar edged up to 94.47 Australian cents at 8am from 94.40 cents at 5pm yesterday.

The kiwi advanced to 87.61 yen from 87.21 yen yesterday, slipped to 51.70 British pence from 51.87 pence and was unchanged at 61.81 euro cents.

The New Zealand dollar fell to 5.2954 yuan from 5.3324 yuan yesterday in the first day of direct trading between the currencies.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

It's Spark Now:
Why Telecom Wanted To Change

New Zealand led the world when Chorus demerged from Telecom. It gave us a telecommunications industry structure where the network is completely separated from the products and services it delivers. The changes brought about a new market dynamic and it dramatically changed Telecom’s role. More>>

ALSO:

Glass Half Empty: Dairy Prices Fall To Lowest Since 2012

Dairy product prices slumped to the lowest level since October 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and cheddar. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news