Sharechat Logo

NZ dollar jumps half a US cent as Fed takes cautious approach to future rate hikes

Thursday 31st January 2019

Text too small?

The New Zealand dollar jumped about half a US cent after the Federal Reserve kept interest rates unchanged and was cautious about the pace and timing of any future hikes. 

The kiwi rose to 69.02 US cents as at 8.30am in Wellington from 68.34 cents immediately before the release, and up from 68.39 cents yesterday. The trade-weighted index gained to 74.19 from 73.78 yesterday. 

The Federal Open Market Committee kept the federal funds rate target range of 2.25-2.5 percent, saying sustained economic growth, a strong labour market, and a 2 percent pace of core inflation was the most likely outcome. The FOMC will be patient in deciding any future hikes, given the uncertainty in the global economy and muted inflation pressures. The Fed pared back a more aggressive stance on rate hikes late last year after chair Jerome Powell faced intense pressure from US President Donald Trump to keep rates low. Powell will hold a press conference after every meeting this year. 

The Fed also changed its policy in unwinding the massive stimulus programme run over the past decade, saying it's willing to alter the pace of shrinking the balance sheet to meet any economic and financial developments. However, it kept its current US$50 billion monthly runoff of Treasury bonds and mortgage-backed securities unchanged. 

"Don't expect anything out of the Fed in the first half - patience is the name of the game here," said Martin Rudings, a foreign exchange dealer at OMF. "It's definitely signalling they're on hold" and the kiwi's rise is more of a US dollar move.

Global tensions between the US and China continue to vex investors, with some companies noting a slowing Chinese economy in earnings downgrades. US and Chinese officials are continuing their trade talks, with the protection of intellectual property a key issue for the US. 

No local data is scheduled for today. 

The kiwi traded at 95 Australian cents from 95.08 cents yesterday, and gained to 4.6329 Chinese yuan from 4.5926 yuan. It rose to 75.17 yen from 74.79 yen. The local currency advanced to 52.56 British pence from 52.27 pence yesterday and increased to 60.07 euro cents from 59.79 cents. 


  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:

Trustpower releases quarterly operating results
Napier Port third-quarter 2020 trade volumes
Rio Tinto decision following strategic review of Tiwai
Contact says smelter closure is ‘disappointing’
South Port (SPN) Statement on NZAS Tiwai Point Aluminium Smelter Closure
Rio Tinto announcement on Tiwai Aluminium Smelter
Me Today announces equity raising to accelerate growth
Scott Technology Trading Update; Rising to the COVID Challenge
New non-binding indicative offer received from apvg, shareholder meeting deferred
U.S. Added 4.8 Million Jobs in June as Reopened Businesses Rehired

IRG See IRG research reports