Dollar heads for 1.3% monthly decline as Ukraine erodes confidence, Fed review looms

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

The New Zealand dollar is heading for a 1.3 percent decline this month as tensions in Ukraine eroded investors' appetite for risk-sensitive assets, and in the lead-up to the Federal Reserve's latest policy review, which will likely add support for the greenback.

The kiwi fell to 85.63 US cents at 5pm in Wellington from 86.73 cents at the close of trading in March. It was up from 85.45 cents at 8am and 85.25 cents yesterday. The trade-weighted index increased to 79.68 from 79.33 yesterday, and is heading for a monthly decline of 1.5 percent.

Rising tensions between Western nations and Russia over Ukraine have kept investors on edge this month and the Standard & Poor's 500 Index is largely flat leading into the end of the month. Still, traders will be watching the outcome of the Federal Open Market Committee's policy review on Wednesday in Washington, with the Fed expected to trim a further US$10 billion from its monthly quantitative easing programme to US$45 billion. The Fed's money printing programme effectively devalued the greenback by flooding supply.

"May is a pretty bad month for the kiwi, but it's not going anywhere fast," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "It's quite surprising how quiet it is today given it's month-end, US equities are flattish for the month, and with the Fed and US data in the next couple of days."

Kelleher said the kiwi is finding support at 85.30 US cents, though he expects sellers to emerge at 85.75/86 cents.

Government figures today showed New Zealand residential building consents rose to a six-and-a-half year high last month, with Auckland's housing shortage and the Canterbury rebuild continuing to drive activity. An ANZ survey showed business confidence remained at elevated levels, even as it drifted off 2-year highs as interest rates rise.

The kiwi rose to 87.65 yen at 5pm in Wellington from 87.36 yen yesterday, and slipped to 92.19 Australian cents from 92.36 cents. It gained to 62.01 euro cents from 61.48 cents and advanced to 52.87 British pence from 50.69 pence.

(BusinessDesk)


Got a question about this story? Leave it in Comments & Questions below.

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

NZ Market Snapshot

Forex

Sym Price Change
USD 0.6359 0.0041 0.65%
AUD 0.9045 0.0034 0.38%
EUR 0.5637 0.0043 0.77%
GBP 0.4152 0.0024 0.58%
HKD 4.9286 0.0309 0.63%
JPY 76.4100 0.7860 1.04%

Commods

Commodity Price Change Time
Gold Index 1139.3 4.620 2015-09-01T00:
Oil Brent 50.4 -3.790 2015-09-01T00:
Oil Nymex 46.0 -3.180 2015-09-01T00:
Silver Index 14.6 0.030 2015-09-01T00:

Indices

Symbol Open High Last %
NZX 50 5660.0 5660.0 5655.0 -1.36%
NASDAQ 4673.6 4722.1 4776.5 -2.94%
DAX 10073.7 10119.5 10259.5 -2.38%
DJI 16528.0 16528.0 16528.0 -2.84%
FTSE 6247.9 6247.9 6247.9 -3.03%
HKSE 21101.4 21213.3 21185.4 0.03%
NI225 17861.8 18467.4 18165.7 1.12%