Story image

NZ dollar jumps against greenback after cautious Fed statement

19 Mar 15

The New Zealand dollar jumped more than one US cent after the Federal Reserve was more cautious than expected about a revival in the US economy and the outlook for interest rate rises.

The kiwi rose as high as 75.22 US cents, from 73.75 cents ahead of the Fed's statement released at 7am New Zealand time. The local currency was trading at 74.34 US cents at 8am in Wellington, from 73.03 cents at 5pm yesterday. The trade-weighted index increased to 78.18 from 77.22 yesterday.

The US dollar index, which measures the greenback against a basket of currencies, dropped to its lowest in more than a week after the Federal Open Market Committee lowered its outlook for growth, inflation and interest rates, offsetting the impact of removing the key word 'patient' from its statement which signals it is prepared to raise rates based on future economic data. The more dovish statement prompted investors to pull back their bets predicting the US dollar would rise, known as a 'long' position.

"This was a more cautious missive than the market had expected, and should see the excessive US dollar long positions, built over the past few weeks, pared even further," Bank of New Zealand currency strategist Raiko Shareef said in a note. "A June lift-off in rates certainly remains a possibility, but it seems more unlikely given the recent slowdown in US economic data, which the Fed acknowledged today."

In New Zealand today, all eyes will be on fourth quarter economic growth data, scheduled for release at 10:45am. The report is expected to show New Zealand's economy expanded at a 0.7 percent pace in the fourth quarter compared with the third quarter, resulting in an annual average growth rate of 3.2 percent, according to a Reuters poll.

The New Zealand dollar touched a two-month high of 50.37 British pence and was trading at 50.02 pence at 8am from 49.46 pence yesterday. The British pound weakened after the Bank of England's minutes to its last meeting showed officials were concerned the nation's currency could strengthen further, keeping inflation lower for longer, which could delay interest rate hikes. A labour report showing UK wage growth slowed also weighed on the British pound.

The kiwi rose to 96.27 Australian cents from 95.75 cents yesterday, jumped to 89.70 yen from 88.61 yen and increased to 69.23 euro cents from 68.84 cents.

How blockchain will impact NZ’s economy
Distributed ledgers and blockchain are anticipated to provide a positive uplift to New Zealand’s economy.
25% of malicious emails still make it through to recipients
Popular email security programmes may fail to detect as much as 25% of all emails with malicious or dangerous attachments, a study from Mimecast says.
Human value must be put back in marketing - report
“Digital is now so widely adopted that its novelty has worn off. In their attempt to declutter, people are being more selective about which products and services they incorporate into their daily lives."
Wine firm uses AR to tell its story right on the bottle
A Central Otago wine company is using augmented reality (AR) and a ‘digital first’ strategy to change the way it builds its brand and engages with customers.
DigiCert conquers Google's distrust of Symantec certs
“This could have been an extremely disruptive event to online commerce," comments DigiCert CEO John Merrill. 
Protecting organisations against internal fraud
Most companies tend to take a basic approach that focuses on numbers and compliance, without much room for grey areas or negotiation.
Telesmart to deliver Cloud Calling for Microsoft Teams
The integration will allow Telesmart’s Cloud Calling for Microsoft Teams to natively enable external voice connectivity from within Teams collaborative workflow environment.
Jade Software & Ambit take chatbots to next level of AI
“Conversation Agents present a huge opportunity to increase customer and employee engagement in a cost-effective manner."