Wednesday 21st September 2011
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The New Zealand dollar was little changed in local trading as investors shook off their fears over Europe’s ongoing debt crisis and focused on Federal Reserve plans to revive a flagging U.S. economy.
The kiwi dollar was little changed at 82.28 U.S. cents at 5pm from 82.25 cents at 8am, and was up from 82.11 cents yesterday.
Investors are waiting for the Federal Open Market Committee announcement tomorrow morning New Zealand time, which is expected to unveil the so-called ‘Operation Twist’. Fed chairman Ben Bernanke’s plan would see the central bank sell short-term debt and buy long-term debt in a bid to stoke private borrowing. Though the U.S.’s major issues are around fiscal policy, the plan is expected to take the edge of a fraying American economy.
“It’s seen as maybe helping support the U.S. economy at the margins - no-one’s expecting it to lift the U.S. out of its current malaise,” said Mike Burrowes, strategist at Bank of New Zealand. “The kiwi has just bounced around with all eyes fixated on what’s happening overseas.”
The Fed meeting comes ahead of New Zealand’s second quarter GDP data, which a Reuters survey of economists is picking to show quarterly growth of 0.5% in the period. That follows a narrower current account deficit than expected, and an increase in tourist numbers in August on the back of the Rugby World Cup.
BNZ’s Burrowes said the local economic story is one of growth, and that’s helping underpin support for the kiwi dollar, which is stuck in the middle of a band between 80.80 U.S. cents and 83 cents.
The kiwi was little changed at 72.02 on the trade-weighted index from 72.03 yesterday, and it fell to 80 Australian cents from 80.12 cents. It was little changed at 62.80 Japanese yen from 62.83 yen previously and slipped to 59.96 euro cents from 60.06 cents. It was little changed at 52.29 pence from 52.29 pence yesterday.
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