Dollar falls as greenback surges on possible Fed June rate hike
US dollar index jumps to its highest in five weeks.
The New Zealand dollar fell as the US dollar surged after the Federal Reserve minutes at its last meeting stoked speculation for an interest rate hike next month.
The kiwi sank to 67.31USc at 8am in Wellington, from 67.90USc at 5pm yesterday. The trade-weighted index declined to 72.46 from 72.79.
The US dollar index, which measures the greenback against a basket of currencies, jumped to its highest in five weeks after the release at 6am New Zealand time of the Fed minutes from its April policy meeting, which showed the central bank is more likely to raise interest rates next month than traders had thought.
The minutes said a June hike was "likely" if second-quarter growth, inflation and labour data improved.” Traders increased their bets for a June rate hike to 34%, up from 19% earlier in the day.
"The minutes were more hawkish than most had expected," Bank of New Zealand senior market strategist Kymberly Martin says. "Many currencies were fairly range-bound overnight, ahead of the release. Subsequently, all have plunged as the US dollar index surged."
The exception is the British pound, which strengthened after a poll in the Evening Standard newspaper indicated sentiment in the upcoming referendum on EU membership had tipped in favour of the “remain” camp, where support grew to 55% from 49%. Those favouring leaving the EU slipped to 37% from 39%.
The kiwi has support at its May lows at 67.20USc, said the BNZ's Ms Martin.
In New Zealand today, the ANZ-Roy Morgan consumer confidence survey is published at 1pm.
Tonight, traders will be looking for further clues on the US interest rate outlook in speeches from Fed vice-chairman Stanley Fischer and Fed Bank of New York president William Dudley.
The New Zealand dollar dropped to 46.13 British pence from 47.02 pence, fell to 4.4001 yuan from 4.4352 yuan, and slid to 60 euro c from 60.16 euro c. It advanced to 74.19 yen from 74.02 yen, and was little changed at 93.14Ac from 93.17Ac.
(BusinessDesk)
Tina Morrison
Thu, 19 May 2016
Thu, 19 May 2016
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Dollar falls as greenback surges on possible Fed June rate hike
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