NZ dollar gains as Fed minutes point to 3 hikes, European data weakens
By Jonathan Underhill
May 24 (BusinessDesk) - The New Zealand dollar rose against the greenback and the euro after the Federal Reserve minutes
pointed to no more than three rate hikes this year while European manufacturing and services data weakened.
The kiwi dollar advanced to 69.20 US cents as at 8am in Wellington from 69.09 cents late yesterday. The kiwi gained to
59.10 euro cents from 58.72 cents and the trade-weighted index rose to 72.62 from 72.48.
The Fed minutes showed most policymakers saw the need for another rate hike in the US "soon" but overall the tone was
taken as slightly dovish. In Europe, figures showed the Markit services and manufacturing PMIs both fell in May, while
consumer confidence came in lower than expected.
The "kiwi has had a late bounce on some perceived dovish comments in the FOMC minutes," said Liz Kendall, senior
economist at ANZ Bank New Zealand. "In response, market pricing for interest rate hikes was little changed, with 92
percent chance of a 25 basis point rate hike next month. Beyond June, the outlook is less certain."
Markets remain jittery about global trade after US President Donald Trump tempered optimism over progress made so far in
trade talks with China. The latest update on New Zealand trade is due for release this morning, with merchandise trade
data for April expected to show a modest $198 million surplus in the month.
The New Zealand dollar fell to 91.46 Australian cents from 91.51 cents yesterday and rose to 4.4189 yuan from 4.4037
yuan. It decreased to 76.16 yen from 76.33 yen and rose to 51.81 British pence from 51.49 pence.
(BusinessDesk)
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