Dollar slips from 11-month high ahead of Fed policy review

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 slipped from an 11-month high ahead of the Federal Reserve's monetary policy review, the first where new chair Janet Yellen will take questions from the media.

The kiwi fell to 86.05 US cents at 5pm in Wellington from 86.28 cents at 8am, though still up from 85.63 cents yesterday. The trade-weighted index rose to 80.19 from 79.87 yesterday.

The Federal Open Market Committee is expected to keep interest rates near zero and trim monthly quantitative easing by a further US$10 billion to US$55 billion when it ends its meeting on Wednesday in Washington. Traders will be looking to see Yellen's take on how the US economy is tracking after a harsh winter weighed on the world's biggest economy.

"I wouldn't be surprised if Yellen showed more caution when she comes out with the press conference," said Stuart Ive, senior client adviser at OMF in Wellington. "It's more than likely kiwi dips should still be bought against the US dollar."

The kiwi dollar rallied during the Northern Hemisphere session after Russia President Vladimir Putin quelled fears his nation would make a grab for more of Ukraine, stoking investors' appetite for risk-sensitive assets.

OMF's Ive said the kiwi dollar is at elevated levels, though that's always the risk: "When you're the first one to raise your head above the crowd, you're always going to attract investment money."

New Zealand's current account deficit narrowed to $1.43 billion in the fourth quarter from $4.88 billion in the September period, with surging dairy exports offsetting an outflow of profits for foreign-owned companies.

Prices at Fonterra's latest GlobalDairyTrade auction fell for a third time, with the trade-weighted price down 5.2 percent to a nine-month low US$4,563 per tonne.

The local currency also got a boost from an agreement between the New Zealand and Chinese governments to allow direct trade between the kiwi and yuan to try and stimulate further trade and investment. The kiwi gained to 5.3324 yuan from 5.2974 yuan yesterday.

The kiwi increased to 87.25 yen at 5pm in Wellington from 87.16 yen yesterday, and traded at 94.38 Australian cents from 94.24 cents. It rose to 61.81 euro cents from 61.46 cents, and gained to 51.86 British pence from 51.45 pence yesterday.

(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 0.6770 -0.0062 -0.91%
AUD 0.8787 -0.0119 -1.34%
EUR 0.6058 -0.0038 -0.62%
GBP 0.4301 -0.0046 -1.06%
HKD 5.2486 -0.0480 -0.91%
JPY 82.7560 -1.0980 -1.31%

Commods

Commodity Price Change Time
Gold Index 1178.5 4.430 2015-06-29T00:
Oil Brent 62.0 -0.800 2015-06-29T00:
Oil Nymex 58.3 -1.350 2015-06-29T00:
Silver Index 15.7 -0.080 2015-06-29T00:

Indices

Symbol Open High Last %
NZX 50 5705.8 5737.4 5705.8 0.37%
NASDAQ 5000.1 5000.1 4958.5 0.42%
DAX 11058.0 11137.1 11083.2 -0.65%
DJI 17600.0 17711.0 17596.3 0.28%
FTSE 6620.5 6620.8 6620.5 -1.06%
HKSE 25944.0 26470.4 25967.0 1.09%
NI225 20174.6 20243.2 20110.0 0.63%