NZ dollar gains against greenback as markets digest Fed statement
By Rebecca Howard
June 14 (BusinessDesk) - The New Zealand dollar gained against the greenback as markets digested US Federal Open Market
Committee statement and subsequent press conference. It also got a lift against the Aussie on disappointing jobs data
across the Tasman.
The kiwi dollar traded at 70.28 US cents as at 5pm in Wellington from 70.18 cents at 8:30 am and versus 70.11 cents late
yesterday. It traded at 92.89 Australian cents from 92.62 cents late yesterday.
The kiwi initially fell on a stronger US dollar after the Federal Reserve hiked interest rates as expected and projected
another two hikes in 2018 and three in 2019. However, it pared those losses when "the statement wasn't as hawkish as it
might have appeared in a 10-second quick skim," said Imre Speizer, senior markets strategist at Westpac Banking Corp in
Auckland.
While the Fed's so-called dot plot projection now points to another rate increase this year "that was only caused by one
person in the whole committee shifting (their view) up a notch," he said. Speizer also said that Fed Chair Jerome Powell
didn't quite "capture the more bullish feeling about the economy" that was apparent in the statement. "He cooled things
off a bit when he spoke," he said. He added that the dollar also lost ground when Powell said news that the Fed will now
hold more press conferences "has no implication for the stance of monetary policy, it's just extra communication," said
Speizer.
Across the Tasman, the number of people employed rose by 12,000, undershooting an expected 19,000 increase, the
Australian Bureau of Statistics said. That news weighed on the Australia dollar, Speizer said.
Looking ahead markets will be waiting to see if the European Central Bank offers any details about an "explicit end
date" for quantitative easing, said Speizer. If they don't, the euro will likely fall whereas if they offer something
concrete it will gain, he said.
The local currency traded at 59.51 euro cents from 59.70 cents yesterday and at 52.46 British pence from 52.47.
It fell to 77.40 yen from 77.56 yen and traded at 4.4936 yuan from 4.4903 yuan. The trade-weighted index was at 73.71
from 73.62
New Zealand's two-year swap rate was unchanged at 2.23 percent and 10-year swaps fell 3 basis points to 3.16 percent.
(BusinessDesk)