NZ dollar little changed as Fed minutes show September rate hike 'close call'

Thursday 13th October 2016

The New Zealand dollar was little changed as minutes to the September meeting of the Federal Open Market Committee showed US policymakers saw a rate hike as being a "close call".

The kiwi traded at 70.72 US cents at 8.30am in Wellington from 70.81 cents yesterday. The trade-weighted index was at 76.08 from 76.03 yesterday.

The US dollar index, a measure of the greenback against a basket of currencies, edged up 0.3 percent after minutes to the Federal Reserve's policy decision affirmed investors' expectations US interest rates will be raised in December, with policymakers saying a hike was needed "relatively soon" and that the September review was a "close call". The greenback has been rallying on the expectation rates will have to be increased this year as the world's biggest economy stays in good heart.

"Today’s Fed minutes provided little new news, and are therefore unlikely to result in the market taking the chances of a November hike any more seriously, but they also provided nothing to stand in the way of the current market moves, ie increasingly pricing in a December hike but being a little nervous about it," ANZ Bank New Zealand senior economist Sharon Zollner said in a note. "The NZD maintained its downward trend as the USD held onto gains against most comers. It isn’t clear what would turn this around meaningfully any time soon."

Local data today showed Auckland's property market came off the boil in September as house price inflation slowed and the volume of turnover declined.

Other data out today include September food prices, manufacturing activity, and the government's 2016 accounts.

The local currency rose to 57.82 British pence from 57.55 pence yesterday and edged up to 64.17 euro cents from 64.06 cents. It was little changed at 93.38 Australian cents from 93.42 cents yesterday and fell to 4.7496 Chinese yuan from 4.7568 yuan. It gained to 73.68 yen from 73.24 yen yesterday.

BusinessDesk.co.nz

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