Sharechat Logo

NZ dollar pares gain in lead up to Fed review, annual current account deficit narrows

Wednesday 17th September 2014

Text too small?

The New Zealand dollar pared gains as investors refrained from taking any new positions ahead of the US Federal Reserve's policy review, and after government figures showed the current account deficit narrowed in the year to June 30.

The kiwi traded at 81.83 US cents at 5pm in Wellington from 81.97 cents at 8am, up from 81.61 cents yesterday. The trade weighted index was little changed at 78.51 from 78.47 yesterday.

Traders are awaiting the outcome of the two-day Federal Open Market Committee meeting, where Fed chair Janet Yellen may indicate a shift away from the zero-interest rate policy the central bank has been running since the global financial crisis. A report by Wall Street Journal Fed commentator Jon Hilsenrath speculated the Fed would maintain its pledge to keep interest rates low for a ‘considerable time’, sapping some support for the greenback, which has been gaining on the prospect of higher rates.

"A lot of people out there have taken a break ahead of the Fed - it's quite a big event for the market if they do indicate higher rates," said Martin Rudings, senior dealer foreign exchange at OMF in Wellington. "If we get some further declines in commodity prices, that would open the for the kiwi to probably go below 80 US cents, as would the Fed indicating earlier interest rate hikes."

Government figures today showed New Zealand's annual current account deficit narrowed to $5.8 billion, or 2.5 percent of gross domestic product, in the June quarter, from $6 billion, or 2.7 percent fo GDP in March. The data came out after the latest auction on Fonterra Cooperative Group's GlobalDairyTrade platform showed dairy prices edging up from a two-year low, with gains in whole milk powder, the biggest product sold by volume.

New Zealand's second-quarter GDP figures are due tomorrow, and economists expect growth of about 0.5 percent in the three months ended June 30.

OMF's Rudings said he's optimistic about New Zealand's growth prospects in the coming year, with an appreciating greenback and subsequent decline in the kiwi likely to be boon for exporters.

The local currency was little changed at 50.25 British pence from 50.33 pence ahead of the Thursday referendum on Scotland's independence.

The kiwi rose to 87.76 yen at 5pm in Wellington from 87.53 yen yesterday, and fell to 90.17 Australian cents from 90.58 cents. It edged up to 63.19 euro cents from 63.08 cents.





NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Pushpay buys Colorado rival for US$87.5m
Xero chair to retire early as family’s health comes first
Business leaders quiz finance minister on capacity to spend $12b
House prices are accelerating again, even in Auckland
13th December 2019 Morning Report
Tourists still coming but growth is slowing
Peters backs StuffME merger bid
Supplements, skincare firm poised for reverse listing
NZX, EEX eye carbon auction opportunity
A2 Milk boss steps down, shares fall 7.7%

IRG See IRG research reports