NZ dollar rises from three-week low ahead of Fed meeting, ignores Wall St selloff
By Paul McBeth
March 20 (BusinessDesk) - The New Zealand dollar bounced from a three-week low ahead of this week's Federal Reserve policy review, which is expected to lift US interest rates, while stocks on Wall Street after growings fears of regulation in the tech sector weighed on Wall Street.
The kiwi rose to 72.53 US cents as at 8am in Wellington from as low as 71.94 cents overnight and from 72.10 cents yesterday. The trade-weighted index advanced to 74.61 from 74.27.
The Federal Open Market Committee kicks off its two-day policy meeting in chair Jerome Powell's first review at the central bank's helm and is expected to raise the federal funds rate a quarter point to a band of 1.5 percent-to-1.75 percent. US Treasury yields have been climbing in anticipation of higher rates, which has supported demand for the greenback. Bond and currency traders largely ignored the sell-off on Wall Street, where the Nasdaq Composite Index dropped 2.7 percent on growing calls for an inquiry into Facebook data breaches, ahead of the Fed meeting. That may catch up later in the week with the Chicago Board Options Exchange's Volatility Index, or VIX, climbing 28 percent to 20.24.
"Despite the rout in global equity markets, the kiwi bounced overnight, with a test of the 200-day moving average support just a little out of reach," ANZ Bank New Zealand chief economist Sharon Zollner said in a note. "However, with market volatility clearly rising, it seems only a matter of time before the NZD tests lower levels."
The kiwi fell as low as 51.21 British pence and was trading at 51.67 pence as at 8am in Wellington from 51.76 pence yesterday after the UK and European Union agreed terms for the Brexit transition which is expected to be approved at the EU summit this week. The kiwi traded at 58.71 euro cents from 58.75 cents yesterday.
Local data today include the Westpac-McDermott Miller consumer confidence survey, while across the Tasman figures on Australian house prices and minutes to the last Reserve Bank of Australia policy review are due for release. The kiwi rose to 93.98 Australian cents from 93.61 cents yesterday and gained to 4.5918 Chinese yuan from 4.5649 yuan.
The local currency rose to 76.85 yen from 76.27 yen yesterday.