NZ dollar declines on US dollar strength after upbeat FOMC minutes
By Tina Morrison
Aug. 21 (BusinessDesk) - The New Zealand dollar declined as the US dollar strengthened after minutes to the Federal
Reserve's last meeting were more upbeat than expected about the world's largest economy.
The kiwi fell to 83.67 US cents at 8am in Wellington, from 83.88 cents at 5pm yesterday. The trade-weighted index edged
lower to 78.91 from 78.93 yesterday.
The US dollar index, which measures the greenback against a basket of currencies, rose to its highest in almost a year
after minutes from the Federal Reserve Open Market Committee showed policymakers were less concerned about low inflation
and more optimistic about a pickup in the labour market, suggesting they may hasten the removal of monetary policy
stimulus. Fed officials have previously indicated interest rates would increase some time next year, after holding the
rate near zero since December 2008.
"Kiwi is lower as are all major currencies against the US dollar," said Imre Speizer, senior market strategist at
Westpac Banking Corp. in New Zealand. "The FOMC minutes were a bit more hawkish than expected, they saw an improving
labour market and improving economic growth and expected it to continue going forward so US interest rates rose, the US
dollar rose, and everything fell against it."
The New Zealand dollar will probably be capped at 84.15 US cents and continue to fall in the coming days towards 82
cents, Speizer said.
Today, traders will be eyeing New Zealand migration data for July as strong net migration is one of the factors cited by
the Reserve Bank in raising interest rates. The latest ANZ-Roy Morgan consumer confidence report is also scheduled for
release today, along with credit card billings for July.
The HSBC China Manufacturing PMI for August will also be watched for signs of how Asia's largest economy is tracking.
Fed Chair Janet Yellen is scheduled to speak on labour markets tomorrow at the annual economic symposium at Jackson
Hole, Wyoming.
The New Zealand dollar slipped to 90.09 Australian cents from 90.28 cents yesterday, edged lower to 50.44 British pence
from 50.51 pence, advanced to 63.11 euro cents from 63.03 cents and gained to 86.86 yen from 86.50 yen.
(BusinessDesk)