NZ dollar jumps over Fed's concerns on strong greenback

NZ dollar jumps a cent after Fed says it is concerned about strong US dollar

By Tina Morrison

Oct. 9 (BusinessDesk) - The New Zealand dollar jumped a cent after the Federal Reserve said it was concerned a strong US dollar could hurt the world's largest economy.

The kiwi touched a high of 79.14 US cents, and was trading at 78.96 cents at 8am, from 77.99 cents immediately before the minutes were released at 7am, and from 77.90 cents at 5pm yesterday. The trade-weighted index rose to 76.67 from 75.96 yesterday.

The US dollar dropped after the release of the Fed minutes to its last meeting showed policy makers at the world's biggest central bank were concerned a global slowdown and a stronger currency posed risks for the US economy. The Fed's concerns about a strong currency affecting exports echo concerns from other central banks, including New Zealand and Australia.

"They have had a weak dollar for the past four to five years, and we have all suffered as a consequence - the RBNZ and the RBA are talking their currencies lower and intervening doing it and all of a sudden the Fed is out saying well we want a weak dollar as well - they can't all have it," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank in New Zealand.

"The Fed is the biggest of the whole lot, it is the biggest central bank, so whatever they say holds more credence than what the Reserve Bank of New Zealand says," Kelleher said. "The old adage is 'don't fight the Fed' and that's proven to be true."

ASB's Kelleher expects the greenback to retrace over the next couple of weeks, potentially pushing the kiwi up to 81 US cents. The kiwi has good support at 78.50 US cents, he said.

In New Zealand today, electronic card spending data for September is released at 10:45am.

The New Zealand dollar rose to 89.38 Australian cents from 88.82 cents yesterday ahead of Australian employment data today.

The local currency advanced to 62.02 euro cents from 61.64 cents, gained to 48.87 British pence from 48.50 pence and rose to 85.41 yen from 84.41 yen.

(BusinessDesk)

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