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

 

NZ dollar jumps above 87 US cents as Fed lowers growth path

NZ dollar jumps above 87 US cents after Fed lowers growth outlook

By Tina Morrison

June 19 (BusinessDesk) - The New Zealand dollar jumped above 87 US cents after the Federal Reserve lowered its US growth and long-term interest rate projections, damping demand for the greenback.

The kiwi spiked from 86.77 US cents immediately before the Federal Open Market Committee's statement at 6am New Zealand time to trade at 87.23 cents at 8am, from 86.58 cents at 5pm yesterday. The trade-weighted index surged to a record 81.27 from 80.82 yesterday.

The FOMC, following its regular two-day meeting, cut its forecast for US economic growth in 2014 to between 2.1 percent and 2.3 percent, from an earlier forecast of around 2.8 percent to 3 percent, and lowered its projections for long-term interest rates by about 25 basis points. Offsetting the lower long-term rates, the Fed increased its short-term rate hike expectations for 2015 and 2016 and reduced its monthly bond-buying programme.

"The FOMC was a slight negative for US interest rates and therefore the US dollar and therefore higher for kiwi/US," said Imre Speizer, Westpac Banking Corp senior market strategist in New Zealand. "US interest rates fell because the interest rate projections were changed. Lower long-run growth is translating into lower long-run interest rates and therefore a lower US dollar."

Later this morning, data is released on first quarter GDP with economists polled by Reuters expecting a gain of 1.2 percent from the previous quarter for an annual average rate of 3.1 percent.

The kiwi will probably remain elevated today, said Speizer.

The New Zealand dollar jumped to 51.33 British pence from 51.05 pence yesterday. The pound weakened after the release of the Bank of England minutes from its meeting this month, which showed officials wanted to see more evidence of economic slack being absorbed before raising rates.

The UK publishes retail sales for May tonight.

The kiwi jumped to 88.89 yen from 88.55 yen yesterday, gained to 92.82 Australian cents from 92.74 cents and increased to 64.19 euro cents from 63.92 cents.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Water: Farming Leaders Pledge To Help Make Rivers Swimmable

In a first for the country, farming leaders have pledged to work together to help make New Zealand’s rivers swimmable for future generations. More>>

ALSO:

Unintended Consequences: Liquor Change For Grocery Stores On Tobacco Tax

Changes in the law made to enable grocery stores to continue holding liquor licences to sell alcohol despite increases in tobacco taxes will take effect on 15 September 2017. More>>

Back Again: Government Approves TPP11 Mandate

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>

ALSO:

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO:

Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>

ALSO:

Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>

ALSO: