NZ dollar climbs above 83 US cents after Fed unveils QE3
By Hannah Lynch
Sept 14 (BusinessDesk) - The New Zealand dollar climbed above 83 US cents for the first time since early March after the Federal Reserve said it will begin a third round of asset purchases in the world's largest economy to boost growth and reduce unemployment.
The New Zealand dollar rose as high as 83.13 US cents, trading at 83 US cents at 8am up from 82.19 cents yesterday at 5pm. The trade weighted index increased to 73.35 from 72.86.
At the end of a two-day policy meeting, Fed Chairman Ben Bernanke announced the central bank would expand its holdings of long-term securities with open-ended purchases of US$40 billion of mortgage debt a month and pledged to keep interest rates at record lows until at least mid-2015. The Fed previously agreed to keep rates low until late 2014.
"The New Zealand dollar has done an awful lot already this morning - it may slow to build on these recent gains," said Alex Sinton, senior dealer at ANZ New Zealand. "You would expect some more US weakness but it may not come on the day."
Topside resistance for the kiwi is likely to come in around 82.30 US cents, Sinton said.
New Zealand's Reserve Bank left its official cash rate unchanged at 2.5 percent yesterday, while delaying its forecast increase in the 90-day bank bill rate, seen as a proxy for the benchmark interest rate, until 2014. The review was Governor Alan Bollard's last before former World Bank executive Graeme Wheeler takes over on Sept. 25.
New Zealand's food price index for August will be released by Statistics New Zealand this morning, followed by the ANZ-Roy Morgan Consumer Confidence survey at 1pm.
The New Zealand dollar rose to 78.65 Australian cents from 78.39 cents and increased to 51.37 British pence from 50.97 pence. The kiwi climbed to 63.89 euro cents from 63.55 cents and advanced to 64.33 yen from 63.85 yen.