Kiwi slips again after traders seize on ‘intervention’, little in Fed minutes

The New Zealand dollar extended its slide from yesterday when Reserve Bank governor Graeme Wheeler outlined possible responses to a high kiwi and traders latched onto his use of the word intervention.

The kiwi did not move much after the release of Federal Reserve minutes.

It fell to 83.53 US cents from 84.08 cents at 5pm in Wellington yesterday. It was at 84.58 cents before Mr Wheeler's speech notes were released. The trade-weighted index was at 76.27 from 76.33.

Mr Wheeler told the New Zealand Manufacturers' and Exporters' Association the kiwi is significantly over-valued, and he "will intervene when the circumstances are right". That was enough to spark a sell-off in the currency as the word intervention got flashed across trader screens.

Minutes of the Federal Open Market Committee's last meeting showed members favoured varying the Fed's monthly bond purchases.

"Everyone latched onto certain parts of [Wheeler's] speech regarding intervention," says Dan Bell, currency strategist at HiFX. "I think the market has over-reacted. He outlines a number of measures that could be used but this was more of an academic position than a policy position."

The kiwi may trade in a range of 83.20 US cents to 84 cents today.

Mr Bell says while the minutes of the Fed meeting show there are differences of opinion between voting members, "I don't think that was news to many people. At the moment policy response continues to sit within the more dovish camp".

The kiwi rose to 54.80 British pence from 54.43 pence and rose to 62.82 euro cents from 62.67 cents.

It climbed to 81.32 Australian cents from 81.14 cents and fell to 78.34 yen from 78.54 yen.

(BusinessDesk)

This article is tagged with the following keywords. Find out more about My Tags

Comment & Question

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7878 -0.0004 -0.05%
AUD 0.9091 0.0005 0.06%
EUR 0.6356 -0.0003 -0.05%
GBP 0.5032 0.0001 0.02%
HKD 6.1123 -0.0013 -0.02%
JPY 92.8410 0.0020 0.00%

Commods

Commodity Price Change Time
Gold Index 1201.1 7.660 2014-11-21T00:
Oil Brent 78.6 -0.120 2014-11-21T00:
Oil Nymex 76.5 0.690 2014-11-21T00:
Silver Index 16.4 0.260 2014-11-21T00:

Indices

Symbol Open High Last %
NZX 50 5526.9 5526.9 5526.9 -0.56%
NASDAQ 4751.0 4751.6 4701.9 0.24%
DAX 9521.2 9736.1 9484.0 2.62%
DJI 17721.0 17894.8 17719.0 0.51%
FTSE 6678.9 6773.1 6678.9 1.08%
HKSE 23353.7 23508.0 23349.6 0.37%
NI225 17285.7 17381.6 17300.9 0.33%