NZ dollar edges up as investors look for Fed to print more money
By Paul McBeth
Sept. 10 (BusinessDesk) - The New Zealand dollar rose through the local trading session as investors get set for the US
Federal Reserve to print more money when its reviews monetary policy later this week after weak jobs growth spurs it to
action.
The kiwi gained to 81.16 US cents at 5pm in Wellington from 81.03 cents at 8am and was little changed from 81.21 cents
at the close of trading in New York last week. The trade-weighted index inched up to 72.51 from 72.40 last week.
Traders are leaning towards an expectation Fed chairman Ben Bernanke will unveil a third round of quantitative easing
and push out the timeline for near-zero interest rates this week when the Federal Open Market Committee reviews monetary
policy. That's supported demand for so-called risk sensitive assets, such as the trans-Tasman currencies, on the
prospect the Fed's action will devalue the greenback.
"The kiwi will probably creep a little higher towards the first half of the week going into the Fed meeting," said Peter
Dragicevich, FX economist at Commonwealth Bank of Australia in Sydney. "There's a risk the market could be somewhat
disappointed" if the Fed's asset purchase programme is for mortgage-backed securities, which would see "the US dollar
lift afterwards," he said.
Four of five analysts surveyed by BusinessDesk expect the kiwi will gain this week as the Fed decision looms and the
Reserve of New Zealand reviews local monetary policy.
Outgoing governor Alan Bollard is tipped to leave the official cash rate at 2.5 percent in his final monetary policy
statement, extending its longest stint without moving.
Chinese imports fell 2.6 percent and its exports gained 2.7 percent, leaving the world's second biggest economy with a
trade surplus of US$26 billion last month from a year earlier, according to official figures today.
Dragicevich said the import data showed underlying demand for iron ore has persisted, and the Chinese economy "might not
be slowing as much as people feared."
The New Zealand dollar rose to 63.50 euro cents from 63.36 cents at the close of trading in New York, and advanced to
50.76 British pence from 50.67 pence. It was little changed at 63.50 yen from 63.55 yen last week, and increased to
78.38 Australian cents from 78.14 cents.
(BusinessDesk)