NZ dollar edges up as traders eye FOMC, Australian dollar gains on leadership spill
By Paul McBeth
Sept. 15 (BusinessDesk) - The New Zealand dollar followed its trans-Tasman counterpart higher after Australia's currency got a boost by Malcolm Turnbull's successful challenge of the country's leadership, as traders continue to shy away from taking firm positions ahead of the Federal Reserve policy meeting at the end of the week.
The kiwi increased to 63.29 US cents at 8am in Wellington from 63.12 cents yesterday. The local currency fell to 88.65 Australian cents form 89.08 cents yesterday.
Australia's currency gained after Prime Minister Tony Abbott was ousted by rival Turnbull, who is promising to rebuild economic confidence in the nation. That helped drag up the kiwi, which typically moves in tandem with its Australian counterpart, with investors still reluctant to take any strong position ahead of the Federal Open Market Committee meeting on Thursday in Washington, which may see the Fed lift interest rates from the near-zero policy it's run for almost seven years.
"It's quite clear to us and a lot of market commentators from a domestic point of view the Fed needs to go, it's external market volatility that's holding them off if they do hold," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "US retail sales, industrial production and the Empire survey (tonight) are all expected to support the US dollar, and that should keep a lid on the kiwi/US."
Investors will be watching the GlobalDairyTrade auction on Tuesday in the US, which will likely show another gain in whole milk prices after their slump through the start of the year. Still, any impact on the kiwi will be limited with the reduced level of product supplied weighing on farmers' incomes, Tuck said.
The Shanghai Composite Index fell 2.7 percent yesterday, and Tuck said any negative news from China will continue to erode investors' confidence. The kiwi gained to 4.0293 yuan at 8am in Wellington from 4.0206 yuan yesterday.
The local currency rose to 55.90 euro cents from 55.65 cents yesterday, and advanced to 41.02 British pence from 40.88 pence. It increased to 76.05 yen from 75.95 yen yesterday. The trade-weighted index was little changed at 68.49 from 48.44 yesterday.