NZ dollar little changed as US dollar recovers ground after Fed meeting

Tuesday 22nd March 2016

The New Zealand dollar was little changed overnight as the US dollar continued to recover ground after dropping last week when the Federal Reserve pulled back its prediction for future interest rate hikes.

The kiwi was at 67.65 US cents at 8am in Wellington, from 67.60 cents at 5pm yesterday. The trade-weighted index was at 71.78 from 71.74 yesterday.

The kiwi is expected to be range bound this week after a rollercoaster ride this month, dropping sharply after the Reserve Bank unexpectedly cut the benchmark interest rate then bouncing back up following the Federal Reserve's signal that it wouldn't hike US rates as fast as previously mooted. The US dollar index, which measures the greenback against a basket of currencies, advanced. Fed speakers overnight were more upbeat about the prospects for US interest rate hikes, although they aren't current voting decision makers on the Federal Open Market Committee.

"It was deadly quiet last night, with little data and little news to drive markets in this holiday-shortened week," Bank of New Zealand currency strategist Jason Wong said in a note. "The US dollar continued to recover after its post-FOMC sell-off and is stronger across the board."

Trading is expected to remain light this shortened Easter week, with little data to drive markets, he said.

BNZ's Wong said the focus today would be on a speech late this afternoon by Reserve Bank of Australia governor Glenn Stevens to the ASIC Annual Forum in Sydney. RBA assistant governor (financial system) Malcolm Edey is taking part in a panel discussion at the ASIC forum earlier in the day. Australia also has fourth-quarter house price data due out today.

The New Zealand dollar slipped to 88.98 Australian cents from 89.10 cents yesterday. It edged up to 60.11 euro cents from 59.96 cents, gained to 46.99 British pence from 46.79 pence, increased to 75.65 yen from 75.28 yen and to 4.3845 yuan from 4.3832 yuan.

BusinessDesk.co.nz

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