NZ dollar gains vs greenback on Fed's 'gradual hikes' view, at 6-month high vs Aussie
By Jonathan Underhill
Feb. 22 (BusinessDesk) - The New Zealand dollar rose against the greenback after the Federal Reserve minutes showed
policymakers still favour gradual rate hikes. It rose to a six-month high versus the Aussie after weaker economic data
across the Tasman.
The kiwi gained to 73.77 US cents after the Fed minutes were released at about 8am NZ time from 73.34 cents late
yesterday. The trade-weighted index rose to 75.66 from 75.31.
The minutes of the Fed's Jan. 30-31 policy meeting, the last with Janet Yellen as chair, said committee members agreed
that an improved near-term economic outlook "increased the likelihood that a gradual upward trajectory of the federal
funds rate would be appropriate. Investors had been looking for any hardening of the language from the Fed, which
currently projects three rate hikes this year, with the first seen as soon as next month. There was a greater consensus
that inflation would pick up.
"The market will look for clarification from the minutes on whether this change in wording signals any change to its
tightening plans," said Nick Smyth, interest rate strategist at Bank of New Zealand, in a note ahead of the release of
the minutes.
Traders will now be watching out for a speech by New York Fed President Bill Dudley tonight, although the topic is
Puerto Rico, and an address by Atlanta Fed President Raphael Bostic to a banking conference for any further insights
into the timing and scale of Fed rate hikes.
The kiwi rose to 93.69 Australian cents and earlier touched 93.76 cents, the highest since early August last year, from
93.31 cents yesterday. The kiwi had fallen against the Aussie yesterday after the release of ostensibly stronger wage
data but the Australian dollar subsequently dropped after figures showed the seasonally adjusted estimate for total
construction work done fell 19 percent in the December quarter. Overnight the Aussie was the worst performing G10
currency.
The kiwi rose to 59.64 euro cents from 59.46 cents and gained to 52.62 British pence from 52.42 pence. It climbed to
79.18 yen from 79.02 yen and gained to 4.6684 yuan from 4.6525 yuan.
(BusinessDesk)
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