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

 

NZ dollar slips as US inflation fuels speculation on rates

NZ dollar slips after higher US inflation turns focus to tighter US monetary policy

By Tina Morrison

June 18 (BusinessDesk) - The New Zealand dollar slipped after a report showing US inflation accelerated more than expected prompted investors to mull the outlook for tighter monetary policy in the world's biggest economy.

The kiwi edged lower to 86.48 US cents at 8am in Wellington from 86.56 cents at 5pm yesterday. The trade-weighted index was a touch higher at 80.74 from 80.70 yesterday.

The US dollar index, which measures the greenback against a basket of currencies, rose after a report showed US inflation accelerated at a faster pace, raising the prospect of higher US interest rates. The data was released ahead of the Federal Reserve's meeting with Chair Janet Yellen scheduled to announce the Fed's monetary policy intentions at 6am tomorrow.

"The New Zealand dollar slid along with other major currencies against the US dollar overnight," Raiko Shareef, currency strategist at the Bank of New Zealand, said in a note. "The US dollar was ascendant last night, as signs of burgeoning inflationary pressure put investors on guard for the Fed's policy meeting tonight."

A Bloomberg News poll released overnight showed more than half of 56 economists thought futures prices were underestimating the likely pace of US monetary policy tightening over the next two years. Traders are currently pricing the Fed Funds Rate at 0.77 percent by the end of 2015, lagging the Fed's own projections from March suggesting 1 percent by the same point, said the BNZ's Shareef.

"Given the upward surprise in inflation data since then, it seems likely the Fed's projections will be upgraded at tonight's meeting," Shareef said.

Today, the New Zealand dollar will probably trade within its recent range of 86.30 US cents to 87 cents, he said.

Overnight, dairy prices rose on lower volumes at Fonterra Cooperative Group's GlobalDairyTrade auction, following declines in the past eight auctions.

Later this morning, a report is expected to show New Zealand's current account deficit continued to shrink.

The kiwi touched 92.74 Australian cents overnight, its highest in more than three weeks, after minutes from the latest Reserve Bank of Australia meeting published yesterday were more pessimistic than expected. The local currency was trading at 92.65 Australian cents at 8am from 92.49 cents yesterday.

The New Zealand dollar was little changed at 63.87 euro cents from 63.84 cents yesterday, and unchanged at 51 British pence ahead of the release of the Bank of England's minutes from its last meeting tonight. It edged higher to 88.34 yen from 88.26 yen yesterday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fletcher Whittled: Fletcher Dumps Adamson In Face Of Dissatisfaction

Fletcher Building has taken the unusual step of dumping its chief executive, Mark Adamson, as the company slashed its full-year earnings guidance and flagged an impairment against Australian assets. More>>

ALSO:

No More Dog Docking: New Animal Welfare Regulations Progressed

“These 46 regulations include stock transport, farm husbandry, companion and working animals, pigs, layer hens and the way animals are accounted for in research, testing and teaching.” More>>

ALSO:

Employment: Most Kiwifruit Contractors Breaking Law

A Labour Inspectorate operation targeting the kiwifruit industry in Bay of Plenty has found the majority of labour hire contractors are breaching their obligations as employers. More>>

ALSO:

'Work Experience': Welfare Group Opposes The Warehouse Workfare

“This programme is about exploiting unemployed youth, not teaching them skills. The government are subsidising the Warehouse in the name of reducing benefit dependency,” says Vanessa Cole, spokesperson for Auckland Action Against Poverty. More>>

ALSO:

Internet Taxes: Labour To Target $600M In Unpaid Taxes From Multinationals

The Labour Party would target multinationals operating in New Zealand to ensure they don't avoid paying tax if it wins power and is targeting $600 million over three years through a "diverted profits tax," says leader Andrew Little. More>>

ALSO: