NZ dollar falls as investors look to US Fed for direction

Tuesday 13th March 2012

The New Zealand dollar fell on speculation the Federal Open Market Committee will refrain from further easing of monetary policy this week in the face of signs the world’s biggest economy is reviving.

The New Zealand dollar fell as low as 81.37 US cents overnight from 81.79 cents yesterday at 5pm. It traded at 81.69 US cents just before 8am this morning. The trade-weighted index was little-changed on 72.86 from 72.89.

Globally, investors have shifted focus to the US ahead the Federal Reserve meeting. US retail sales figures tomorrow are expected to show a 1 percent gain in February, according to a Reuters survey, adding to Friday’s payrolls report that showed America is continuing to stack on jobs.

The prospect of the fed printing money for a third time would have further devalued the greenback and push the kiwi higher. So far, US policy makers have pledged to keep interest rates low till at lead late 2014.

“The New Zealand dollar will remain range bound today – with tomorrow’s FOMC statement the key event of the week, said, Alex Sinton, senior dealer at ANZ New Zealand. “Expect topside attempts to be capped around 82.10 US cents.”

New Zealand’s food price index for February is set for release this morning. In January, an increase in the price of fruit and vegetables was the most significant element though the index overall showed no change for the month, after consecutive rises in November and December.

Euro-zone finance ministers are preparing to give final approval for Greece’s second financial rescue package in Brussels on Wednesday.

In New Zealand, the yield on 10 year government bonds fell one basis point to 4.06 percent.

The New Zealand dollar fell to 62.14 euro cents from 62.49 cents yesterday. It fell to 67.20 yen from 67.29 yen.

The kiwi rose to 77.82 Australian cents from 77.60 cents and advanced to 52.27 British pence from 52.19 pence.

BusinessDesk.co.nz

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