Sharechat Logo

NZ dollar edges higher as looming Brexit vote stays on Fed's radar

Wednesday 22nd June 2016

Text too small?

The New Zealand dollar edged higher after Federal Reserve chair Janet Yellen told policymakers the looming British referendum on whether to leave the European Union was among the global risks being closely watched by the Fed. 

The kiwi increased to 71.21 US cents at 8am in Wellington from 71.12 cents yesterday and rose to 48.70 British pence from 48.51 pence. 

Markets are in a holding pattern ahead of the June 23 vote where the British public will decide whether or not to stay part of the European bloc. The Fed's Yellen told the Senate's banking committee that the central bank is watching the situation carefully. Still, she said she didn't "want to overblow the likely impact" of a successful 'leave' vote, which would likely stoke investor demand for safe-haven currencies, such as the greenback. However, she said she didn't anticipate it would induce a recession in the world's biggest economy. 

"Yellen’s testimony to the Senate offered few new clues on the path of normalisation. However, there was a subtle change in tone from being on watch for whether, rather than when, the US economy would show clear signs of improvement," ANZ Bank economist Philip Borkin said in a note. The kiwi is "range bound for now, but the ‘Brexit’ vote later in the week and opinion polls leading up to it will no doubt shape direction."

In local trading, New Zealand's May migration and tourism figures are released at 10.45am, which will likely show net migration remains strong. Reserve Bank data on credit card spending at 3pm is also on the radar. 

The kiwi rose to 95.45 Australian cents at 8am in Wellington from 95.04 cents yesterday after the release of minutes to this month's Reserve Bank of Australia policy review showed some economic data had beaten the bank's expectations. 

The local currency gained to 63.26 euro cents from 62.72 cents yesterday after European Central Bank president Mario Draghi urged policymakers to push through economic reforms to support the eurozone's recovery, and that he was prepared to stabilise markets and provide liquidity if the UK voted to leave the EU. 

The kiwi rose to 74.63 yen from 74.09 yen yesterday and advanced to 4.6929 Chinese yuan from 4.6462 yuan. The trade-weighted index increased to 75.68 from 75.40 yesterday.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
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:

MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite

IRG See IRG research reports