Dollar kicks off higher than yesterday
UPDATED: The New Zealand dollar was at 83.39USc by 3.30pm, having jumped briefling above 84USc at 9.30am.
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The New Zealand dollar kicked off this morning higher than the level it began yesterday.
After a day of turmoil in which the currency began at 83.00USc, the currency tumbled, falling briefly below 80USc, and ended yesterday at 82.40USc.
AT 7.30pm this morning it had risen to 83.60USc.
Overnight the US markets fell, after US Federal Reserve Chairman Ben Bernanke released a downbeat statement on the economy.
There would now be “a somewhat slower pace of recovery over coming quarters” than previously thought, the chairman said.
“Moreover, downside risks to the economic outlook have increased…economic conditions - including low rates of resource utilisation and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.”
The signal from the Fed, in summary, was a slower recovery, but no inflation concerns.
Mr Bernanke also suggested the last round of quantitative easing by the Federal Reserve had not really worked.
There is growing speculation/concern that a further round of easing will be announced at the annual gathering of monetary authorities in Jackson Hole, Wyoming, at the end of the month.
Locally, a further round of printing money – ‘QE3’ in the jargon – would almost definitely push the New Zealand dollar back up again.
The NZD/AUD has also been highly volatile, trading in a wide band between 0.8010 and 0.8090, pulled around by fluctuations in risk sentiment, BNZ economists said.
The NZD/GBP broke below 0.5000 yesterday afternoon for the first time since mid-June. It has subsequently rallied in the wake of the US FOMC statement to above 0.5100, they said.
With no NZ data releases today, the NZD will continue to respond to shifts in global risk appetite but volatility is expected to remain high, BNZ said.
Rob Hosking
Wed, 10 Aug 2011
Wed, 10 Aug 2011
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Dollar kicks off higher than yesterday
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