NZ dollar little changed near 73USc as traders question Fed's rate track
Minutes of the Federal Reserve's last policy review showed little appetite for a rate hike in the near-term.
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The New Zealand dollar was little changed near 73USc after the minutes of the Federal Reserve's last policy review showed little appetite for a rate hike in the near-term.
The kiwi traded at 72.91USc at 8am in Wellington from 72.88USc yesterday. The trade-weighted index was almost unchanged at 76.83 from 76.80.
The dollar index, a measure of the greenback against a basket of currencies, extended its decline to a near two-month low as investors appear reluctant to price in an increase in US interest rates. The prospect of lower rates for longer helped push up stocks on Wall Street and in Europe and underpinned gains in commodity prices. That appetite for risk-sensitive assets and New Zealand's already wide interest rate differential is supporting demand for the kiwi.
"With the Fed in no apparent hurry to lift rates, or should we say not providing enough of a hat tip to the hawks (though data contingent of course), the lack of any inflationary smoking gun is the green light for a continuation of the carry trade," ANZ Bank New Zealand chief economist Cameron Bagrie said in a note, referring to the practice where investors borrow cheap money to buy higher-yielding assets. "So it's little surprise to see the NZ dollar trading well, bonds supported and the US dollar struggle."
Traders will be watching the central bankers' symposium at Jackson Hole, Wyoming next week where the topic is 'Designing Resilient Monetary Policy Frameworks for the Future'. Central banks have been grappling with the lack of inflation, despite the flood of cheap money available through an extended period of quantitative easing and near-zero rate monetary policies.
The local currency increased to 72.98Ac from 72.92Ac yesterday and rose to 4.8311 Chinese yuan from 4.8242 yuan. It fell to 64.14 euro cents from 64.40 cents yesterday and declined to 55.36 British pence from 55.78 pence. The kiwi edged down to ¥72.78 from ¥72.92 yesterday.
(BusinessDesk)
Paul McBeth
Fri, 19 Aug 2016
Fri, 19 Aug 2016
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NZ dollar little changed near 73USc as traders question Fed's rate track
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