NZ dollar steady against greenback despite massive drop in share markets
By Rebecca Howard
Oct. 11 (BusinessDesk) - The New Zealand dollar was largely unchanged against the US dollar, holding its ground despite
Asian share markets tumbling after Wall Street took an overnight nosedive as investors fretted about rising US yields.
The kiwi traded at 64.75 US cents at 5pm in Wellington from 64.62 US cents at 8am and 64.84 US cents late yesterday. The
trade-weighted index was at 70.95 from 70.98 late yesterday.
The Standard & Poor's 500 ended Wednesday with a loss of 3.29 percent, the Nasdaq Composite shed 4.08 percent and the Dow Jones
Industrial Average fell 3.2 percent. New Zealand's S/NZX 50 index was down 3.6 percent at 5pm, tracking a sea of red in Asia.
The New Zealand dollar has been "remarkably resilient given how much stock markets fell overnight and today," said Imre
Speizer, Westpac Banking Corp's head of NZ strategy. The kiwi held up partly because the market has now fully priced the
Federal Reserve's tightening cycle and also because the kiwi's recent sharp fall means it is trading below fair value at
around 68 US cents.
Comments from US President Donald Trump, who pointed an accusing finger at the Fed for raising interest rates, also
helped keep a lid on the greenback. “I really disagree with what the Fed is doing,” Trump told reporters. “I think the
Fed has gone crazy.”
Speizer said any hint of possible government pressure on the Federal Reserve will make markets nervous. The yield on US
10-year Tressuries also pulled back to 3.15 percent after touching a high of 3.26 percent earlier this week.
The focus now will be on US September consumer price index figures due later today. A higher-than-expected outcome could
see the greenback gain as it will add to speculation of a more aggressive tightening cycle from the Fed. Investors are
expecting inflation to have edged up 0.2 percent on the month and 2.4 percent on the year, according to Dow Jones
The kiwi traded at 48.94 British pence from 49.27 pence yesterday and rose to 91.51 Australian cents from 91.09 cents
yesterday. It was at 4.4872 Chinese yuan from 4.4862 yuan. It declined to 72.59 yen from 73.29 yen yesterday and was at
55.97 euro cents from 56.33 cents.
New Zealand's two-year rate was unchanged at 2.01 percent while 10-year swaps eased 2 basis points to 2.89 percent.