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

 

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Sparks Fly: Gordon Campbell On China Steel Dumping Allegations

No doubt, officials on the China desk at MFAT have prided themselves on fashioning a niche position for New Zealand right in between the US and China – and leveraging off both of them! Well, as the Aussies would say, of MFAT: tell ‘em they’re dreaming. More>>

ALSO:

Loan Sharks: Finance Companies Found Guilty Of Breaching Fair Trading Act

Finance companies Budget Loans and Evolution Finance, run by former 1980s corporate high-flyer Allan Hawkins, have been found guilty of 106 charges of breaching the Fair Trading Act for misleading 21 borrowers while enforcing loan contracts. More>>

ALSO:

Post Panama Papers: Govt To Adopt Shewan's Foreign Trust Recommendations

The government will adopt all of the recommendations from former PwC chairman John Shewan to increase disclosure and introduce a register for foreign trusts with new legislation to be introduced next month. More>>

ALSO:

The Price Of Cheese: Cheddar At Eight-Year Low

Food prices decreased 0.5 percent in the year to June 2016, influenced by lower grocery food prices (down 2.3 percent), Statistics New Zealand said today. Compared with June 2015, cheese prices were down 9.5 percent, fresh milk was down 3.9 percent, and yoghurt was down 9.2 percent. More>>

ALSO:

Financial Advisers: New 'Customer-First' Obligations

Goldsmith plans to do away with the current adviser designations which he says have been "unsatisfactory" in that some advisers are obliged to disclose potential conflicts of interest and act in their customers' best interests, but others are not. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news