Thursday 23rd August 2018
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The New Zealand dollar was virtually unchanged as minutes to the last Federal Reserve policy review showed the central bank committee still expected to keep raising interest rates.
The kiwi traded in a tight range overnight and was at 67 US cents as at 8am in Wellington from 67.03 cents yesterday. The trade-weighted index was at 72.30 from 72.36 yesterday.
Minutes to the last Federal Open Market Committee meeting noted some caution over trade, housing and emerging markets. But members largely held to the current projection that another rate hike will be needed soon. The US economy has been expanding at a rapid pace with the White House's fiscal stimulus and the Fed minutes said that "fairly soon" monetary policy settings wouldn't be able to be called "accommodative". In contrast, New Zealand's Reserve Bank doesn't expect to raise the official cash rate in the immediate future.
"Here in New Zealand the market continues to price a decent chance that the next OCR move is a cut after the very dovish Monetary Policy Statement earlier this month," ANZ Bank New Zealand economists Sharon Zollner and Philip Borkin said in a note. "That divergence, plus increasing evidence that New Zealand commodity prices may be past their best, means we expect the NZD to remain under pressure over the rest of the year (despite a decent bounce in the past week)."
No local data is scheduled for today. Investors are looking ahead to the central bankers' forum at Jackson Hole, Wyoming, where Fed chair Jerome Powell will speak.
The kiwi was little changed at 74.04 yen from 74.01 yen yesterday and traded at 91.08 Australian cents from 91.10 cents. It slipped to 57.75 euro cents from 57.90 cents yesterday and traded at 51.86 British pence from 51.91 pence. The local currency declined to 4.5828 Chinese yuan from 4.5875 yuan.
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