Kiwi pares loss as Bernanke’s testimony keeps investors wary
The US Fed chairman is seen as more cautious than some other central bank officials who support unwinding quantitative easing.
The New Zealand dollar pared its decline in local trading as the prospect of Federal Reserve chairman Ben Bernanke's congressional testimony on Wednesday keeps traders wary of taking their greenback support too far.
The kiwi rose to 81.20 US cents at 5pm in Wellington from 80.77 cents at 8am and 80.68 on Friday in New York. The trade-weighted index increased to 76.65 from 77.40 last week.
The Dollar Index, a measure of the greenback against a basket of currencies, climbed near a three-year high on Friday as investors start betting on the Fed pulling back its $US85 billion a month asset purchase programme on improving data out of the US.
Those bets are being kept in check with Mr Bernanke's testimony before a House of Representatives committee on Wednesday, with the Fed chairman seen as more cautious than some other central bank officials who support unwinding quantitative easing.
"The testimony is not where Bernanke announces monetary policy, but he will send a firm signal," says Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney.
"I don't think we'll see the kiwi back up to 85 US cents in a hurry, but it's easy to see a decent chunk of last week's losses being reversed if Bernanke comes out as very dovish."
The Fed will review monetary policy on June 20.
A BusinessDesk survey of five strategists predicts the kiwi may trade in a range of 79.20 US cents to 83 US cents this week, with a downside bias.
Traders will be looking to the Reserve Bank's survey of inflation expectations to be published tomorrow. The bank is likely to be reviewing its own forecasts over coming weeks ahead of its next interest rate decision on June 13.
The kiwi fell to 83.01 Australian cents from 83.15 last week and increased to 83.39 yen from 82.98 yen. It advanced to 63.21 euro cents from 63.04 cents last week and rose to 53.11 British pence from 53.17 pence.
(BusinessDesk)
Paul
Wed, 11 Jul 2018
Wed, 11 Jul 2018
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Kiwi pares loss as Bernanke’s testimony keeps investors wary
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