Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ dollar weakens as Beige Book stokes doubts about QE3

NZ dollar weakens as Beige Book stokes doubts about QE3

By Jonathan Underhill

Aug. 30 (BusinessDesk) – The New Zealand dollar fell, approaching 80 US cents for the first time since late July, after the Federal Reserve’s Beige Book said the US economy is expanding “gradually” and second-quarter economic growth figures were revised up.

The kiwi dollar fell to 80.01US cents from 80.42 cents at 5pm in Wellington yesterday. The trade-weighted index fell to 71.99 from 72.26.

US gross domestic product for the second quarter was revised up to a 1.7 percent annual pace from an initial estimate of 1.5 percent, according to the Commerce Department, while an index of pending home resales climbed at more than twice the forecast pace. The Fed’s Beige Book regional business survey pointed to increased home sales and retail sales in saying the world’s biggest economy is growing. The data casts doubt on the Fed’s willingness to embark on a further round of stimulus.

“In reality QE3 is not a done deal,” said Alex Sinton, senior dealer at ANZ New Zealand. “A lot of the strength of Asian currencies has been around QE3.” The kiwi “led the way lower” overnight.

The data overnight, if anything, has sharpened interest in the central bankers’ retreat at Jackson Hole, Wyoming, where Fed chairman Ben Bernanke’s speech will be especially scrutinised. The retreat may be less of a talk-fest as the Wall Street Journal has reported European Central Bank President Mario Draghi is too busy to attend.

Sinton said there are “buyers below 80 cents” for the kiwi though the currency is still likely to track lower as the month of September looms as a “very big month for currencies” with investors awaiting the Federal Reserve’s policy meeting, the ECB, the German Constitutional Court, the Reserve Bank of New Zealand and the Reserve Bank of Australia.

The RBA’s monetary policy review next week may be more muted than previously thought as key benchmark iron ore prices have tumbled, eroding the value of Australia’s iron ore exports, which amounted to A$64 billion, or 25 percent of total shipments in 2011.

The Australian dollar recently traded at US$1.0348 from US$1.0363 yesterday.

The kiwi dollar fell to 77.24 Australian cents from 77.59 cents late yesterday and slipped to 62.98 yen from 63.20 yen. The New Zealand dollar fell to 63.90 euro cents from 64.03 cents and dipped to 50.55 British pence from 50.86 pence.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Energy: New Zealand Could Be World’s First Large-scale Producer Of Green Hydrogen

Contact Energy and Meridian Energy are seeking registrations of interest to develop the world’s largest green hydrogen plant. The plant has the potential to earn hundreds of millions in export revenue and help decarbonise economies both here and overseas... More>>

MBIE: 36th America’s Cup Post-event Reports Released

Post-event reporting on the 36th America’s Cup (AC36) has been released today. The reports cover the delivery of the event by Crown, Council and America’s Cup Event Limited, economic impacts for Auckland and New Zealand, and delivery of critical infrastructure... More>>

Fonterra: Farmer Feedback Set To Shape Revised Capital Structure Proposal

With the first phase of Fonterra’s capital structure consultation now complete, the Co-op is drawing up a revised proposal that aims to reflect farmers’ views. A number of changes are being considered to the preferred option initially put forward in the Consultation Booklet in May... More>>

Statistics: Household Saving Falls In The March 2021 Quarter

Saving by New Zealanders in the March 2021 quarter fell to its lowest level in two years after rising sharply in 2020, Stats NZ said today. Increases in household spending outpaced income growth, leading to a decline in household saving from the elevated levels that prevailed throughout 2020... More>>