NZ dollar little changed on the week after Fed sparks big moves
By Paul McBeth
Sept. 19 (BusinessDesk) - The New Zealand dollar is heading for a 0.2 percent weekly decline against the greenback, after the prospect for higher US interest rates pushed the local currency to a seven-month low.
The local currency traded at 81.37 US cents at 5pm in Wellington from 81.51 cents on Friday in New York last week. It traded at 81.43 cents at 8am, up from 81.06 cents yesterday. The trade-weighted index advanced to 78.46 from 78.28 yesterday, largely unchanged from 78.53 at last week's close.
A BusinessDesk survey of 11 currency traders and strategists on Monday predicted the kiwi would trade between 79.60 US cents and 83.40 cents this week. Six picked the local currency to decline, three said it would remain relatively unchanged and two expected a gain.
The kiwi fell as low as 80.73 cents on Thursday after the Federal Open Market Committee raised its estimate for the key interest rate in 2015, while Federal Reserve chair Janet Yellen reiterated that rates will remain low for a "considerable time." The prospect of a shift away from the Fed's zero-interest rate policy stoked demand for the greenback, which has seen it surge against the yen.
"The kiwi made an attempt at a bounce and got above 82 US cents, then the FOMC came out and slammed it back down," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "The trend in the US dollar is still intact."
Local figures today showed New Zealand's economy is still relatively strong, with annual net migration at a record in the year ended Aug. 31, and a private consumer confidence survey showing household sentiment climbed from a 10-month low this month. Government figures yesterday showed New Zealand's economy grew 0.7 percent in the June quarter, for annual expansion of 3.5 percent.
Tomorrow's general election holds potential uncertainty for markets if there isn't a clear outcome, and it takes awhile for a government to be cobbled together, ANZ's Tuck said.
The local currency is heading for a 1.4 percent weekly decline against the pound after Britain's currency rallied on early polls showing Scotland has rejected a binding referendum to leave the United Kingdom. The kiwi traded at 49.38 British pence at 5pm in Wellington from 50.10 pence on Friday in New York last week. It traded at 49.84 pence yesterday.
The local currency rose to 88.79 yen from 88.13 yen yesterday, and advanced to 90.77 Australian cents from 90.46 cents. It was little changed at 62.98 euro cents from 63.02 cents.