Dollar drops after Fed's Dudley plays up US interest rate hike case
A rate hike will be on the table for serious consideration at the Fed's March meeting
The dollar fell after New York Federal Reserve President William Dudley talked up the prospects for US interest rate hikes while San Francisco Fed president John Williams said he saw no need to delay such a move in the face of stronger US employment and inflation.
The dollar fell to 71.39USc at 8am in Wellington from 71.45USc late yesterday and from 72.17USc early yesterday. The trade-weighted index was at 77.91 from 77.90.
Mr Dudley told CNN the case for raising interest rates "has become a lot more compelling" given Donald Trump's election as president and a Republican-controlled Congress.
Mr Williams said a rate hike would be "on the table for serious consideration" at the Fed's March meeting.
The comments from the Fed officials helped lift the greenback after Mr Trump's speech to the Joint Session of Congress, while presidential rather than heckling, failed to deliver the hoped-for policy details.
"The comments helped boost the USD and significantly increased the probability of a rate hike later this month," Bank of New Zealand currency strategist Jason Wong says.
"It took the probability of a March rate hike based on Fed Fund futures above the 50% mark for the first time. Our calculations suggest that the probability is now around the 70% mark."
Locally, traders are awaiting a speech by Reserve Bank governor Graeme Wheeler this morning, which comes after economic data showed the foundations of sturdy economic growth such as strong migration remain in place.
The local currency fell to 93Ac from 93.23Ac yesterday when figures showed Australia's economy grew 1.1% in the three months through December, beating economists’ forecasts.
The kiwi rose to 58.09 British pence from 57.77 pence and traded at 67.33 euro cents from 67.77 euro cents. It rose to 81.20 yen from 81.02 yen and was at 4.9146 yuan from 4.9143 yuan.
(BusinessDesk)
Jonathan Underhill
Thu, 02 Mar 2017
Thu, 02 Mar 2017
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Dollar drops after Fed's Dudley plays up US interest rate hike case
65281