NZ dollar little changed after FOMC minutes, gains vs Aussie as oil falls
By Jonathan Underhill
July 6 (BusinessDesk) - The New Zealand dollar was little changed against the greenback after minutes of the last Federal Open Market Committee meeting gave no new insights into the outlook for US interest rates, and it gained against the Aussie as crude oil fell.
The kiwi dollar traded at 72.85 US cents as at 8am in Wellington from 72.83 cents late yesterday. It rose to 95.80 Australian cents from 95.62 cents yesterday.
The FOMC minutes showed some Fed policymakers were concerned about the weaker inflation data in the first quarter although most agreed with the need to raise interest rates, while some wanted to announce the beginning of moves to reduce the Fed's massive balance sheet as well. The minutes were taken as a sign the Fed will raise the fed funds rate for the third time this year. Brent crude oil fell almost 4 percent to US$47.74 a barrel on reports Russia will oppose further cuts to OPEC production.
"The Fed minutes didn’t offer anything new. Officials repeated support for gradual interest rate hikes," said Doug Steel, economist at Bank of New Zealand. "The committee is divided on when to start reducing the balance sheet, disappointing those looking for more guidance."
The trade-weighted index climbed to 78.36 from 78.26. While crude oil fell, figures yesterday showed New Zealand commodity prices have been rising. The ANZ Commodity Price Index increased 2.1 percent in June, led by butter, cheese, skim milk powder, sheep meat and beef. The kiwi rose against the Australian dollar earlier this week after the Reserve Bank of Australia kept a neutral tone to its policy in keeping its cash rate unchanged.
The week may be about to heat up, with heavy releases of economic data scheduled for Thursday and Friday and key leaders set to meet at the G-20 meeting at the weekend. Today brings Australian trade for May, US ADP payrolls for June, the US May trade balance and the US June non-manufacturing ISM survey. The European Central Bank's June meeting minutes are also released on Thursday. Friday brings the key non-farm payrolls data for June in the US.
The kiwi gained to 4.9528 yuan from 4.9504 yuan yesterday. It traded at 64.19 euro cents from 64.14 cents and was little changed at 56.38 British pence. The kiwi traded at 82.48 yen from 82.45 yen.