NZ dollar treads water ahead of NZ poll, Fed meeting

Wednesday 20th September 2017

The New Zealand dollar remained above 73 US cents but barely budged on the day as markets await the latest New Zealand political opinion poll ahead of Saturday's general election and the outcome of the US Federal Reserve's Open Market Committee meeting.

The kiwi dollar was at 73.07 US cents at 5pm versus 73.13 US cents at 8am in Wellington and 72.78 cents late yesterday. The trade-weighted index rose to 76.09 from 75.97 yesterday.

The dollar trod water ahead of the 6pm release of the latest 1News Colmar Brunton poll as the Sept 23 election fast approaches. "Out of New Zealand events today it would appear the Colmar Brunton poll has the most market focus," said Westpac Bank strategist Imre Speizer. The final leaders' debate tonight will also garner interest. There was no financial market reaction to news that the second-quarter current account deficit was narrower than economists were expecting.

However, Speizer said the main focus was on the Fed's interest rate decision, due at 1800 GMT on Wednesday, with no rate change the widely expected. However, the Fed could announce that it will begin paring its bond holdings, with reductions likely to start in coming months. Markets are also waiting for any hints of a rate hike in December. Concerns around US policies and data have created uncertainty about when the next lift might come.

Domestically, investors will also be watching for tomorrow's gross domestic product data. The median in a Bloomberg poll of 12 economists is for 0.8 percent GDP growth quarter-on-quarter in June and 2.5 percent on the year. While any surprise could cause a reaction in the kiwi, traders said it will be quickly overshadowed by the upcoming election.

The kiwi dollar was at 91.10 Australian cents from 91.25 cents. It rose to 54.03 British pence from 53.76 pence and gained to 60.84 euro cents from 60.77 cents. It rose to 81.43 yen from 81.24 yen and was at 4.7978 yuan from 4.7954 yuan.

The two-year swap rate was unchanged at 2.24 percent while 10-year swaps rose 2 basis points to 3.27 percent.

(BusinessDesk)

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