NZ dollar falls after Yellen says rate hike 'appropriate,' driving up US dollar
The kiwi fell to 66.91USc at 8am in Wellington.
The New Zealand dollar fell after Federal Reserve chairwoman Janet Yellen said a rate hike is "appropriate" in coming months, driving the greenback up against a basket of currencies.
The kiwi fell to 66.91USc at 8am in Wellington, from 67.44USc in late Asian trading last week. The trade-weighted index slipped to 72.29 from 72.61 in Wellington on Friday.
Mrs Yellen told an audience at Harvard University that it was appropriate "for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months, such a move would be appropriate." The comments add to the rate hike hints from other Fed officials in recent speeches, although apart from saying the June Federal Open Market Committee meeting is "live" for a rate hike, no further guidance has been given on timing.
"Mrs Yellen's comments were interpreted as slightly hawkish, corroborating the recent views of other FOMC members, albeit tempered by data-conditionality," said Imre Speizer, currency strategist at Westpac Banking Corp, in a report. He said 66.70USc was the "immediate downside risk" for the kiwi, while over the next few months it could reach 65USc because of the prospects of the Reserve Bank cutting interest rates while the Fed hikes.
The market is pricing a 30% chance of a Fed hike in June while the odds of a cut in July are at 65%, Speizer said.
The New Zealand dollar fell to 93.11Ac from 93.33Ac in Wellington on Friday and dropped to 60.19 euro cents from 60.30 cents. It declined to ¥73.73 from ¥74.08 and fell to 4.3903 yuan from 4.4255 yuan. The kiwi decreased to 45.73 British pence from 45.97 pence last week.
(BusinessDesk)
Jonathan Underhill
Mon, 30 May 2016
Mon, 30 May 2016
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NZ dollar falls after Yellen says rate hike 'appropriate,' driving up US dollar
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