NZ dollar little changed ahead of FOMC as market sees June rate hike as a certainty

Monday 22nd May 2017

The New Zealand dollar was little changed at the start of a quiet week for domestic economic data and the Federal Reserve's policy meeting is likely to be the main event ahead of an expected US rate hike next month.

The kiwi dollar traded at 69.25 US cents as at 8am in Wellington, little changed from late New York trading on Friday. The trade-weighted index slipped to 76.99 from 77.05.

St Louis Federal Reserve president James Bullard, regarded as a dove of the US central bank, said in a speech on Friday that the Fed's projected path for interest rates was "overly aggressive relative to actual incoming data on US macroeconomic performance." But his comments weren't enough to shake the market's conviction that the Fed will hike next month, with the odds sitting at about 76 percent. The main event for the New Zealand market is likely to be Finance Minister Steven Joyce's election year budget on Thursday.

"There is very little in the way of domestic economic data releases ahead of Thursday’s annual budget release, while internationally Thursday morning’s FOMC meeting minutes will be scrutinised by investors for clues on the timing of the next rate move," traders at HiFX said in a note.

In commodity markets, crude oil may get a boost from Saudi Arabian comments that OPEC would reduce production to help ease oversupply. Brent crude was at US$53.61 a barrel, the highest in about a month. Saudi Arabia's energy minister Khalid al-Falih told Bloomberg on Saturday that oil producers within OPEC and several outside including Russia agreed to extend crude output cuts by nine months to help trim a supply glut, Bloomberg reported.

The New Zealand dollar was little changed at 92.75 Australian cents from 92.78 cents on Friday in the US. The kiwi rose to 61.79 euro cents from 61.54 cents and traded at 53.23 euro cents from 52.12 cents. It traded at 76.99 yen from 77.05 yen and was little changed at 4.7665 yuan.

(BusinessDesk)

Comments from our readers

No comments yet