NZ dollar gains as disappointment over Fed saps US dollar

Monday 20 March 2017 05:08 PM

NZ dollar gains as disappointment over Fed saps US dollar

By Rebecca Howard

March 20 (BusinessDesk) - The New Zealand dollar was higher, continuing to benefit from US dollar weakness on disappointment the US Federal Reserve isn't planning to pick up the pace of its interest rate hikes this year.

The kiwi dollar traded at 70.37 US cents as at 5 pm in Wellington versus 70 US cents as at 8am in Wellington and 70.17 cents in New York on Friday . The trade-weighted index was at 76.32 from 76.20 in New York.

"It's a continuation of the US dollar stuff from last week," said Tim Kelleher, head of institutional foreign exchange sales for ASB Bank. The greenback took a tumble after US central bank officials indicated they wouldn't accelerate the pace of rate increases later in the year. Kelleher also said risk appetite is improving in Asia with several Asian currencies gaining ground today. "I think there is generally a bit of Asia risk on," he said.

Domestically, investors will be watching for this week's Global Dairy Trade auction, which is widely expected to show that dairy prices slightly weaker, but largely on increased supply. That will be followed by the central bank rate decision later in the week where economists are expecting it to keep rates steady at 1.75 percent and to continue to signal that rates will remain low for some time to come.

The kiwi was at 56.82 British pence from 56.63 pence in New York on Friday and traded at 65.40 euro cents from 65.31 cents. It edged up to 91.14 Australian cents from 90.96 cents. It was at 4.8582 yuan from 4.8397 yuan and was at 79.18 yen from 79.05 yen.

The two-year swap rate fell 4 basis points to 2.26 percent while the 10-year swaps fell 5 basis points to 3.47 percent.

(BusinessDesk)

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