Sharechat Logo

NZ dollar falls after Fed talks up US economy, says inflation may be transient

Thursday 2nd May 2019

Text too small?

The New Zealand dollar fell after upbeat comments from Federal Reserve Chairman Jerome Powell pushed the prospect of a US rate cut off the table.

The kiwi was at 66.19 at 8am in Wellington versus 66.50 at 5pm yesterday. The trade-weighted index was at 72.24 versus 72.46

The Fed left rates unchanged overnight, but the greenback got a lift during Powell's press conference when he sounded more upbeat on the US economy. He noted the strength of the labour market and said activity rose at a solid pace.

"We do think our policy stance is appropriate right now and we don't see a strong case for moving in either direction," he said.

Powell said that while inflation, particularly core inflation, was softer than expected in the first quarter  "there are good reasons to think that some, or all, of the unexpected decrease may wind up being transient."  The reference to transient helped bolster the greenback further. 

The kiwi was already under pressure after weak domestic jobs data yesterday.

"The post-FOMC USD rally puts more pressure on the kiwi as markets up the ante ahead of next week’s RBNZ meeting," ANZ Bank FX/rates strategist Sandeep Parekh said. The soft jobs data added to the view that the central bank could move to cut rates as early as next week's meeting. 

The New Zealand dollar was trading at 94.37 Australian cents from 94.27, at 50.73 British pence from 50.98, at 59.09 euro cents from 59.29, at 73.74 Japanese yen from 74.13 and at 4.4565 Chinese yuan from 4.4760.

(BusinessDesk)

  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: NZ shares rise; trading quiet ahead of upcoming earnings
NZ dollar firms against the Aussie heading into federal election
Fletcher-commissioned Deloitte report shows building material costs are low
RBNZ censures ANZ, prescribes risk capital calculation
RBNZ censures ANZ, prescribes risk capital calculation
SeaDragon shareholders back $4M injection to stave off liquidation
SeaDragon shareholders back $4M injection to stave off liquidation
Businesses get some reprieve in March quarter on cheaper prices
NZ manufacturing activity expands on month in April but down on year
Xero's CEO says it still has a cautious future in the US

IRG See IRG research reports