NZ dollar dips after Fed minutes release

The New Zealand has dipped after minutes of the Federal Reserve meeting show some foresee rate rises in the near future.

The New Zealand dollar weakened after the Federal Reserve minutes of its January meeting showed some officials raised the possibility of rate rises "relatively soon".

The kiwi slipped to 82.95 US cents after the release of the minutes from 82.99 cents at 5pm on Wednesday. The trade-weighted index was unchanged at 77.83.

The US dollar strengthened, pushing the kiwi lower, after the minutes which traders considered were positive on growth with a hawkish bias. The minutes showed policy makers disagreed on the likely timing of the Fed's first interest rate increase, with a few officials raising the possibility it might be appropriate to increase the federal funds rate in the near future.

"The market is taking it ever so slightly on the hawkish side of things so it is US dollar positive," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand. "They are really focusing on a statement in the minutes that a few participants raised the possibility it might be appropriate to increase the Federal funds rate relatively soon.

"In the long term it doesn't actually change much for the kiwi because people will look through it and realise it is not actually new information," Mr Tuck said.

In New Zealand reports are scheduled for release on fourth quarter producer prices, job advertisements for January and the ANZ-Roy Morgan consumer confidence report for February.

Traders will be eyeing China's latest HSBC/Markit Flash PMI which is expected to show February manufacturing in Asia's largest economy remained just below the 50 level which delineates contraction and expansion.

The New Zealand dollar weakened to 91.93 Australian cents from 92.11 cents, it was little changed at 60.34 euro cents from 60.31 cents, slipped to 49.66 British pence from 49.75 pence and advanced to 84.93 yen from 84.79 yen.


2 min read

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Source: AAP


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