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.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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