Dollar falls to week low as greenback advances in anticipation of improving growth outlook
The New Zealand dollar fell to a week low as the greenback strengthened against its major counterparts in anticipation the world's largest economy is improving.
The kiwi touched 86.02 US cents over the weekend, and was trading at 86.16 cents at 8am in Wellington, from 86.10 cents at the New York close and 86.35 cents at 5pm on Friday. The trade-weighted index edged up to 80.12 from 80.06 on Friday.
The US dollar index, which measures the greenback against a basket of currencies, touched 79.915 over the weekend, its highest level this month. The US currency is expected to appreciate against this year as the US economy expands and the Federal Reserve reduces its stimulus. Forecasters predict a rally against a basket of peers in each of the next four quarters, and gains of about 11 percent by the end of 2015, according to the median estimate in a Bloomberg News survey.
"The New Zealand dollar lost ground amidst a backdrop of US dollar strength," Raiko Shareef, currency strategist at Bank of New Zealand, said in a note. "A strengthening US dollar was the dominant theme in the currency space. The US dollar gained against all the majors."
The kiwi has initial support at 85.90 US cents and spurts higher toward 86.70 cents should be challenged, BNZ said.
Federal Reserve Bank of Atlanta president Dennis Lockhart said in Dubai yesterday the US economy should grow at an annualised rate of 3 percent or more in the second quarter, despite expanding just 0.1 percent in the first quarter. Still, he said it may not be clear for some time if the pick-up is sustainable.
Lockhart also said he expected the US central bank to have run down its bond-buying programme by its October or December meeting and to start raising interest rates in the second half of next year.
In New Zealand today, the Real Estate Institute of New Zealand is expected to publish its latest house price figures for April.
The New Zealand dollar dropped to two-week low of 91.85 cents 91.96 Australian cents from 92.25 cents on Friday ahead of a monthly report on Australian business confidence and the latest credit card spending figures, both scheduled for release at 1:30pm New Zealand time.
The kiwi advanced to 62.62 euro cents from 62.40 cents on Friday, gained to 51.13 British pence from 51.03 pence and slipped to 87.77 yen from 87.82 yen.