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


NZ dollar jumps to 3-year high after Fed minutes

NZ dollar jumps to 3-year high as traders pull back US interest rate bets on dovish Fed minutes

By Tina Morrison

April 10 (BusinessDesk) – The New Zealand dollar jumped three quarters of a US cent against the greenback to its highest since July 2011 after the Federal Reserve minutes from its last meeting in March pushed out expectations of when the Fed will start raising interest rates.

The kiwi jumped as high as 87.25 US cents from 86.47 cents immediately before the release of the minutes at 6am New Zealand time. The local currency was trading at 87.12 US cents at 8am from 87.01 cents at 5pm yesterday. The trade-weighted index edged lower to 80.76 from 80.83 yesterday.

The dollar index, which measures the greenback against a basket of currencies, plunged to a one-month low after the Federal Open Market Committee meeting minutes from March 18-19 showed policy makers were concerned that projections for an interest rate rise were overstated and could be misconstrued by the market. The more accommodative stance from the Fed minutes prompted traders to pull back bets on rate hikes.

“The broad message from the FOMC minutes is that the FOMC was happy with market pricing and the pace of the US recovery. That means the post-meeting reaction in rates (bringing forward hikes) needed to be unwound,” ANZ Bank New Zealand strategist Carrick Lucas and senior foreign exchange strategist Sam Tuck said in a note. “While the pricing move had mostly been unwound already, the USD selling post the minutes looks like the final capitulation of that positioning.”

The New Zealand dollar is likely to trade between 86.40 US cents and 87.50 cents today, ANZ said.

New Zealand’s Reserve Bank started hiking rates last month to head off rising inflation and a string of increases of between 25 and 50 basis points is expected over the next couple of years as stimulus provided by low interest rates is gradually removed while the economy recovers.

“The key global economies appear stuck with low interest rates for a while yet and, with the RBNZ as the only major central bank looking to unwind monetary policy quickly, the NZD can only go higher,” Bancorp Treasury Services said in a note, adding that the record high 88.41 US cent level is “under threat”.

In New Zealand today, traders will be eyeing the BusinessNZ Performance of Manufacturing Index for March, scheduled for release at 10:30am.

In Australia, the focus will be on March employment data to be published at 1:30pm New Zealand time, which may show the unemployment rate rose to 6.1 percent from 6 percent.

The New Zealand dollar was little changed at 92.80 Australian cents from 92.82 cents yesterday.

Traders will also watch China’s trade figures today for signs of how Asia’s largest economy is tracking. China is the largest trading partner for New Zealand and Australia.

The kiwi weakened to 51.88 British pence from 51.95 pence yesterday ahead of the Bank of England meeting tonight. It slipped to 62.87 euro cents from 63.09 cents yesterday and was unchanged at 88.81 yen.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Trade: NZ Trade Deficit Widens To A Record In September

Oct. 27 (BusinessDesk) - New Zealand's monthly trade deficit widened to a record in September as meat exports dropped to their lowest level in more than three years. More>>


Animal Welfare: Cruel Practices Condemned By DairyNZ Chief

DairyNZ chief executive Tim Mackle says cruel and illegal practices are not in any way condoned or accepted by the industry as part of dairy farming.

Tim says the video released today by Farmwatch shows some footage of transport companies and their workers, as well as some unacceptable behaviour by farmers of dragging calves. More>>


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>>


International 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>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news