Kiwi heads for 2.2% weekly gain against greenback
The Federal Open Market Committee will review US monetary policy next week and investors will be on alert for any sign of any changes.
The New Zealand dollar is heading for a 2.2 percent weekly gain against the greenback after the Reserve Bank kept rates on hold yesterday, and the Federal Reserve approaches its first monetary policy review since signalling it would slow its money-printing programme.
The kiwi traded at 80.56 US cents at 5pm in Wellington from 80.78 cents at 8am and 79.20 cents yesterday.
A BusinessDesk survey of six strategists on Monday was divided on where the kiwi would end up, predicting it would trade in a range of 77 US cents and 81 cents, having started the week at 78.85 cents.
It bounced back after the Reserve Bank kept the official cash rate on hold at 2.5 percent yesterday, with no rate rise likely this year as RBNZ governor Graeme Wheeler contends with competing inflationary pressures from a strong kiwi and bubbling property market.
"The Reserve Bank is playing its cards very close to its chest," says Dan Bell, currency strategist at HiFX in Auckland. "There's a lack of conviction with the [kiwi's] bounce that we've seen" and it might pare some of its late gain for the week in the Northern Hemisphere trading session.
The Federal Open Market Committee will review US monetary policy next week and investors will be looking for any hint on unwinding its $US85 billion a month quantitative easing programme.
The prospect of the Fed rolling back its stimulus has been underpinning gains in the US in recent weeks.
"It's going to give us a bit of insight into what's the Fed's thinking, and how real the prospect of QE tapering is," Mr Bell says.
The trade-weighted index advanced to 74.64 from 73.51 yesterday and is heading for a 0.4 percent gain on the week.
The kiwi surged to 76.72 yen from 74.98 yen yesterday and increased to 84.01 Australian cents from 83.74 yesterday. It jumped to 60.37 euro cents from 59.29 cents yesterday and advanced to 51.32 British pence from 50.50 pence.
(BusinessDesk)
Paul McBeth
Wed, 11 Jul 2018
Wed, 11 Jul 2018
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Kiwi heads for 2.2% weekly gain against greenback
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