NZ dollar holds near two-week low ahead of FOMC meeting, GDP data
By Paul McBeth
March 16 (BusinessDesk) - The New Zealand dollar held near a two-week low ahead of the Federal Reserve's latest policy
review and local figures on fourth-quarter economic growth.
The kiwi traded at 66.01 US cents at 5pm in Wellington, near the 65.82 cents level it hit overnight, and down from 66.67
cents yesterday. The trade-weighted index fell to 70.85 from 71.39 yesterday.
The Federal Open Market Committee is expected to keep the fed funds rate unchanged at the conclusion of its two-day
meeting on Wednesday in Washington, and investors will be looking to see whether the world's biggest central bank has
enough confidence in the US economy to project more interest rate hikes. Statistics New Zealand will release gross
domestic product data which is expected to show the economy grew 0.6 percent in the December quarter.
"We expect the FOMC will continue to signal that the economic data in the US is strong enough for them to consider
gradual normalisation, but given market pricing it wouldn't fit with their definition of gradual if they were to
surprise markets and hike tomorrow," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "The kiwi
will track sideways with all that going on as we wait and see what they shall bring."
Government data today showed an annual current account deficit of $7.7 billion, or 3.1 percent of GDP, in the December
quarter, smaller than economists were expecting, as tourism spending reached a record high last year.
Meantime, dairy prices unexpectedly fell at the latest GlobalDairyTrade auction, while Reserve Bank imposed stress
testing concluded the country's biggest five lenders to the dairy sector were robust enough to withstand a protracted
downturn in prices.
New Zealand's two-year swap rate rose two basis points to 2.28 percent, and 10-year swaps gained four basis points to
3.11 percent.
The kiwi fell to 88.48 Australian cents from 88.91 cents yesterday ahead of February employment figures across the
Tasman tomorrow.
The local currency dropped to 4.3047 Chinese yuan from 4.3373 yuan yesterday, and decreased to 74.86 yen from 75.66 yen.
It declined to 59.46 euro cents from 59.95 cents yesterday, and was little changed at 46.71 British pence from 46.69
pence.
(BusinessDesk)