The New Zealand dollar held near a week-high against the greenback after US Federal Reserve chairman Ben Bernanke talked down the prospect of raising interest rates in the face of persistently high American unemployment.
The New Zealand dollar held near a week-high against the greenback after US Federal Reserve chairman Ben Bernanke talked down the prospect of raising interest rates in the face of persistently high American unemployment.
The kiwi was little changed at 82.17 US cents at 5pm from 82.18 cents at 8am and up from 81.60 cents yesterday. The trade-weighted index advanced to 72.96 from 72.72.
New Zealand’s currency climbed as high as 82.35 US cents in local trading after Bernanke affirmed his view the Federal Funds Rate will stay near zero until the end of 2014 in a speech in Arlington, US. Traders are pricing in 15 basis points over hikes to the US benchmark interest rate over the coming 12 months according to the Overnight Index Swap curve.
Stock markets across Asia rallied, with Hong Kong’s Hang Seng Index up 1.3 percent to 20943.08, Japan’s Nikkei 225 Index up 1.6 percent to 10175.83 and Australia’s S&P/ASX 200 Index up 0.6 percent to 4289.4 in afternoon trading.
“Bernanke’s trying things on again and it’s getting pretty old now,” said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional. “The kiwi is struggling to get beyond 82.50 US cents and will probably be capped at 82.50/83 cents.”
The Fed’s Bernanke is scheduled to deliver a lecture at George Washington University on Tuesday in Washington DC.
The currency rallied near a month-high against its trans-Tasman counterpart at 78.24 Australian cents, and Kelleher said that’s been the “trade du jour” with the kiwi likely to continue appreciating against the Australian dollar. It traded at 78.12 cents at 5pm from 77.99 cents yesterday.
Weaker Australian economic data and more exposure to the Chinese economy means the Australian dollar will bear the brunt of any slowdown in the world’s second biggest economy, and Kelleher said ASB is forecasting the kiwi to climb to 80 Australian cents by the end of the year.
Chinese manufacturing data out later this week is expected to show declining activity in the world’s second biggest economy.
The kiwi was little changed at 61.52 euro cents from 61.53 cents yesterday and slipped to 51.46 pence from 51.52 pence. It climbed to 68.08 yen from 67.44 yen yesterday.
