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NZ dollar holds gains as investors await Fed review
By Paul McBeth
Dec. 19 (BusinessDesk) - The New Zealand dollar held on to gains from yesterday's stronger than expected business confidence report as investors wait to see whether the Federal Reserve adjusts its plans for future interest rate hikes.
The kiwi was at 68.48 US cents as at 8am in Wellington, unchanged from yesterday's New Zealand close. The trade-weighted index was at 74.85 from 74.86.
The local currency rose yesterday after the ANZ Business Outlook survey showed fewer firms were pessimistic about the general economic outlook. Firms have been in a rut since the formation of the Labour-led coalition government last year, despite relatively solid economic data. Dairy prices rose 1.7 percent at the latest GlobalDairyTrade auction with strong gains in milk fats.
The Federal Open Market Committee's policy review is the main event this week, with investors uncertain whether the central bank will pare back its track for rate hikes next year. The Fed has raised the federal funds rate three times this year and is expected to lift it again tomorrow. That has seen the yield on US 10-year Treasuries rise to 2.83 percent from 2.45 percent at the start of the year, boosting the attraction of the greenback and reducing the appeal of equities.
"After receiving a boost from yesterday’s better business confidence figures, FX ranges are likely to hold today ahead of the FOMC," ANZ Bank New Zealand economists Philip Borkin and Miles Workman said in a note.
Local data today include a consumer confidence survey and third-quarter balance of payments.
The kiwi traded at 4.7209 Chinese yuan from 4.7191 yuan yesterday after Chinese President Xi Jinping warned other nations not to dictate to China, and promised to continue a reform programme. He didn't provide any details.
The local currency rose to 95.43 Australian cents from 95.24 cents yesterday and traded at 77.02 yen from 77.06 yen. It was little changed at 54.19 British pence from 54.22 pence yesterday and decreased to 60.22 euro cents from 60.31 cents.
(BusinessDesk)
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