NZ dollar falls as investors see higher US interest rates on track after Fed delay

Tuesday 22nd September 2015

The New Zealand dollar fell as investors still see the Federal Reserve hiking interest rates from the near-zero rate they've been at for seven years after the world's biggest central bank held off raising rates last week.

The kiwi traded at 63.14 US cents at 5pm in Wellington from 63.21 cents at 8am, down from 63.57 cents yesterday. The trade-weighted index declined to 68.43 from 68.61 yesterday.

The dollar index, a measure of the greenback against a basket of currencies, rallied during New York trading after Atlanta Federal Reserve president Dennis Lockhart joined the growing number of central bank officials expecting a rate hike later this year. Investors have been weighing up whether the Fed will refrain from raising interest rates this year after staying on hold last week, citing global growth concerns.

"The market's looking through the weakness on Friday and normalisation is still coming, and that was good cause for US dollar to be lifted," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "The kiwi is in a bit of a consolidating pattern at the moment - anywhere near 62 (US cents) seems to be a short-term purchasing opportunity, and anywhere near 64 a short-term selling opportunity."

Investors will be watching a Chinese gauge of manufacturing tomorrow to assess the strength of the world's second biggest economy, which has been weighing on the global outlook in recent weeks. The kiwi declined to 4.0233 Chinese yuan from 4.0439 yuan yesterday.

The local currency was little changed at 88.57 Australian cents from 88.60 cents yesterday after Bureau of Statistics figures showed house price growth in Australia accelerated in the three months ended June 30, with Sydney and Melbourne driving the gains.

The kiwi gained to 56.38 euro cents from 56.15 cents yesterday, and slipped to 40.70 British pence from 40.89 pence. It was little changed at 76.05 yen from 76.14 yen yesterday.

New Zealand's two-year swap rate rose 2 basis points to 2.7 percent, the five-year swap gained 3 basis points to 3.07 percent, and the 10-year swap increased 3 basis points to 3.59 percent.

BusinessDesk.co.nz

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