NZ dollar falls as economic growth meets forecasts, Fed sees faster rate hikes next year
By Paul McBeth
March 20 (BusinessDesk) - The New Zealand dollar fell as local economic growth met market expectations, while a more
upbeat Federal Reserve signalled steeper interest rate increases as the world’s biggest economy shows more signs of
life.
The kiwi fell to 85.24 US cents at 5pm in Wellington from 85.51 cents at 8am and 86.21 cents yesterday. The
trade-weighted index declined to 79.88 from 80.22 yesterday.
New Zealand’s economy grew 0.9 percent in the three months ended Dec. 31, led by an expanding manufacturing sector,
according to Statistics New Zealand. That was largely in line with market expectations, leaving traders to mull over the
impact of the Fed’s more optimistic view of the US economy. The Fed raised its projections for interest rate hikes next
year, spurring demand for the greenback.
“You’ll get more exaggerated moves (from local data) from lower numbers than higher numbers in these key releases
because of how much good news is fully price in the kiwi,” said Alex Hill, head of dealing at HiFX in Auckland. “The US
dollar had a good move, and in the short-term things are really down to them – everyone’s back on the tapering theme
with the focus back on US data.”
HiFX’s Hill said the kiwi has settled very quickly into a new range between 84.50 US cents and 86.50 cents.
Traders will be watching US data during the Northern Hemisphere session, including new jobless claims, home sales and
the Philadelphia Fed business outlook survey.
The kiwi dollar increased to 94.54 Australian cents at 5pm in Wellington from 94.40 cents yesterday and was little
changed at 87.23 yen from 87.21 yen yesterday. It slipped to 51.54 British pence from 51.87 pence and declined to 61.63
euro cents from 61.81 cents.
The New Zealand and Chinese governments this week agreed to allow direct trading between the nations’ currencies, and
the kiwi fell to 5.3064 yuan from 5.3324 yuan yesterday.
The yuan is pegged to movements in the US dollar. China this week doubled the yuan’s trading band against the greenback
to 2 percent on either side of a daily reference rate set by the central bank.
(BusinessDesk)