NZ dollar little changed as Fed tapering gloom persists
The New Zealand dollar was little changed in local trading as investors continue to deal with the gloomy sentiment hanging from the Federal Reserve's decision not to slow asset purchases last week.
The kiwi traded at 82.52 US cents at 5pm in Wellington from 82.46 cents at 8am and up from 82.27 cents yesterday. The trade-weighted index was 76.88 from 76.74 yesterday.
Traders are in a holding pattern after the US central bank decided against tapering its US$85 billion monthly bond-buying programme, which has been debasing the value of the greenback. The market had been expecting the Fed would start tapering this month, and will have to wait until the central bank sees more strength in the economic recovery.
"We still think the kiwi will go down, but it's all data dependent out of the States while we're asleep," said Martin Rudings, senior adviser at OM Financial in Wellington. Until tapering begins, "clients are a bit hesitant to take new positions."
Sentiment in local trading rooms took a debt after Emirates Team New Zealand lost its bid to win the America's Cup yachting regatta from US billionaire Larry Ellison's Oracle Team USA today, despite racing away to an 8-1 match-point advantage last week. A win may have spurred optimism among local investors.
The kiwi gained to 81.52 yen at 5pm in Wellington from 81.20 yen yesterday after the Japanese government announced Prime Minister Shinzo Abe will announce an economic stimulus package on Oct. 1 next week, while also making a final decision on whether to raise the country's sales tax. There's mounting speculation Abe may cut corporate taxes.
The local currency rose to 88.10 Australian cents from 87.75 cents yesterday, and traded at 61 euro cents from 61.10 cents. It edged down to 51.31 British pence from 51.47 pence yesterday.