NZ dollar gains before OCR review even as Trump tax plan, Fed view lift greenback
By Jonathan Underhill
Sept. 28 (BusinessDesk) - The New Zealand dollar rose ahead of the Reserve Bank's interest rate review while many other currencies fell against the greenback on the prospects for US rate hikes and President Donald Trump's plan to slash taxes.
The kiwi dollar gained to 72.17 US cents as at 8am in Wellington from 72.09 cents late yesterday. The trade-weighted index rose to 76.11 from 75.85 yesterday.
Market bets on a Federal Reserve rate hike in December have increased to 72 percent, helped by what were taken as hawkish comments by chair Janet Yellen, who warned this week of the dangers of "persistently easy monetary policy". Meanwhile, Trump unveiled plans to overhaul US taxes, slashing the corporate rate to 20 percent from 35 percent and reducing the top tax rate to 35 percent from 39.6 percent, although he didn't set out how this would be achieved without driving up the US federal deficit. In New Zealand, acting Reserve Bank governor Grant Spencer is expected to keep the official cash rate unchanged at 1.75 percent.
"USD strength was a feature overnight against all and sundry excluding the NZD," said Cameron Bagrie, chief economist at ANZ Bank New Zealand, in a note. With the OCR review it is "no change expected and a very balanced view on the outlook."
The US dollar was also helped by figures showing durable goods orders rose a greater-than-expected 1.7 percent in August.
The kiwi rose to 61.42 euro cents from 61.14 cents late yesterday and gained to 53.86 British pence from 53.63 pence. It rose to 81.39 yen from 80.99 yen, advanced to 91.81 Australian cents from 91.52 cents and gained to 4.7928 yuan from 4.7814 yuan.