Thursday 06 October 2016 08:44 AM
NZ dollar dips as better than expected US data keeps investors upbeat on Fed rate hike
By Paul McBeth
Oct. 6 (BusinessDesk) - The New Zealand dollar dipped as another upbeat US economic report kept investors optimistic the
Federal Reserve will raise interest rates before the end of the year, stoking demand for the greenback.
The kiwi declined to 71.69 US cents at 8am in Wellington from 71.87 cents yesterday. The trade-weighted index edged down
to 76.42 from 76.53.
The US ISM non-manufacturing index delivered a reading of 57.1 in September, beating the 53 level economists were
predicting and giving investors heart the Fed will proceed with a rate hike in November or December. That added to
growing support for an increase in rates after non-voting Fed official Jeffrey Lacker told reporters earlier this week
that he favoured a hike last month. US non-farm payrolls on Friday will be watched for further confirmation higher
interest rates are on their way.
"The non-manufacturing ISM jumped to its highest level in nearly a year, suggesting August’s weakness was an
aberration," ANZ Bank New Zealand senior economist Sharon Zollner said in a note. "As long as US rate hike expectations
are creeping up, the NZD/USD looks likely to continue to grind lower."
New Zealand's currency dropped to a seven-week low yesterday after prices unexpectedly fell at the latest
GlobalDairyTrade auction, raising concerns about the outlook for the country's biggest export commodity, and amid
speculation the European Central Bank may scale back its quantitative easing programme, which would push interest rates
higher and reduce the appeal of the kiwi. The New Zealand dollar was little changed at 63.89 euro cents from 64.05 cents
yesterday.
The kiwi was little changed at 56.20 British pence from 56.22 pence yesterday, having retreated from its highest level
in decades on fears UK Prime Minister Theresa May’s exit from the European Union and focus on curbing immigration would
cut the country out of the single market.
The New Zealand dollar traded at 94.03 Australian cents from 94.11 cents yesterday and rose to 74.31 yen from 73.87 yen.
It decreased to 4.7800 Chinese yuan from 4.7927 yuan yesterday.
(BusinessDesk)
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