Kiwi gains as US minutes show desire for more stimulus

Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.

Launch Radio player

BUSINESSDESK: The New Zealand dollar gained after minutes of the last Federal Reserve policymakers' meeting showed a widespread desire for more stimulus to underpin the world's biggest economy.

The greenback tumbled against the yen after the minutes were released.

The kiwi rose to 81.32 US cents from 80.84 cents at 5pm in Wellington yesterday. The trade-weighted index edged up to 72.85 from 72.73.

Minutes of the Federal Open Market Committee's July 31 to August 1 meeting say many members "judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery".

That has stoked speculation the Fed could act in September, making it a double-whammy month, with action also expected from the European Central Bank.

"Most people seem to be aiming for September. It could make September a pretty massive month," says Alex Sinton, senior dealer at ANZ New Zealand. "The kiwi is going to be well supported."

Still, "it is not an easy road higher for the kiwi. The fact all this [central bank] activity is being undertaken, you're acknowledging the landscape is such that you have to take further action".

Traders are looking ahead to the meeting of central bankers at Jackson Hole, Wyoming, as the next opportunity for Federal Reserve chairman Ben Bernanke to hint at what form more stimulus could take.

"Bernanke is likely to say something that will be followed by the market," Mr Sinton says.

With central bankers in major economies needing act to underpin growth, New Zealand's outlook is relatively benign, reasonably supported by fundamentals and nominal yields on offer much better than available elsewhere, he says.

New Zealand 10-year bonds are yielding about 3.73% compared to about 1.7% for comparable 10-year Treasuries and 1.44% for 10-year German bunds.

The kiwi traded at 64.96 euro cents from 64.87 cents yesterday and fell to 63.86 Japanese yen from 64.10 yen. Japan's currency strengthened to 78.53 per US dollar from 79.15 immediately before the FOMC minutes were released.

The New Zealand dollar moved to 77.42 Australian cents from 77.35 cents and was little changed at 51.24 British pence from 51.22 pence.

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

2 Comments & Questions

Commenter icon key: Subscriber Verified

They don't need QE3, they need to shake the money out of the banks that are hoarding it.

  • 0
  • 0

The banks aren't hoarding it .... they siphoning it off into off-balance sheet entities that still have massive holes from when the capital markets froze up on Aug. 2007.

The banks are mostly technically insolvent if you include those liabilities. GAAP was suspended in 2008 so that off balance sheet liabilities were not marked-to-market but instead marked-to-model (i.e. make it up yourself bankster). As far as I know, that is still the situation today .... capital markets frozen (now on permanent central bank life support) and GAAP suspended for bank's off balance sheet liabilities.

  • 0
  • 0

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


Sym Price Change
USD 0.7567 0.0000 0.00%
AUD 0.9753 0.0000 0.00%
EUR 0.6945 0.0000 0.00%
GBP 0.5084 0.0000 0.00%
HKD 5.8650 0.0000 0.00%
JPY 90.0730 0.0000 0.00%


Commodity Price Change Time
Gold Index 1198.2 -6.000 2015-03-27T00:
Oil Brent 56.4 2.710 2015-03-27T00:
Oil Nymex 48.9 -2.560 2015-03-27T00:
Silver Index 17.1 -0.071 2015-03-27T00:


Symbol Open High Last %
NZX 50 5833.2 5854.2 5833.2 0.36%
NASDAQ 4863.7 4899.3 4863.4 0.57%
DAX 11920.2 11954.1 11843.7 0.21%
DJI 17673.6 17729.1 17678.2 0.19%
FTSE 6895.3 6910.6 6895.3 -0.58%
HKSE 24541.4 24549.9 24497.1 -0.04%
NI225 19374.7 19590.0 19471.1 -0.95%