NZ dollar falls as certainty grows for US rate hike in December

The New Zealand dollar fell as the greenback rose to a level it has only touched once before since 2003 after Federal Reserve Bank of St. Louis president James Bullard said Donald Trump's presidential victory is unlikely to prevent a Fed rate hike next month.

The local currency fell to 70.74USc as at 8am in Wellington from 70.92USc late yesterday.

The trade-weighted index edged up to 77.43 from 77.36 from 77.47 as the Australian dollar weakened ahead of employment data for October, which are expected to show Australia's economy added 15,000 jobs last month, while the unemployment rate rose to 5.7% from 5.6%. Traders said earthquake concerns are also restraining the kiwi.

"The market now sees a December 14 Fed hike as virtually a done deal" with odds of 93% priced in, Bank of New Zealand senior market strategist Kymberly Martin says. "This view was corroborated by the Fed's Bullard."

The US dollar index rose as high as 100.584, only the second time since 2003 that it has exceeded 100.5.

US president-elect Trump has proposed tax cuts and spending $US550 billion on infrastructure and had talked of $US1 trillion of funding with private sector financing, measures likely to lift US economy growth, inflation and interest rates.

New Zealand's two-year swaps fell 1 basis point to 2.21% while the 10-year swap rate fell 1 point to 3.21%.

Ms Martin says the two-year swap rate "remains close to fair value on our view that the OCR will remain at 1.75% throughout next year, before a gradual hiking cycle begins in late H1 2018."

The US dollar index, which measures the greenback against a basket of major currencies, has risen above 100 for the first time since December 2015 amid expectations the Federal Reserve will raise interest rates next month.

The kiwi dollar climbed to 94.51Ac from 93.80Ac ahead of the employment figures. It traded at 77.29 yen from 77.36 yen and fell to 4.8620 yuan from 4.8711 yuan. The local currency was little changed at 56.84 British pence and rose to 66.25 euro c from 66 c.

(BusinessDesk)

 


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NZ Market Snapshot

Forex

Sym Price Change
USD 0.7039 0.0012 0.17%
AUD 0.9220 0.0003 0.03%
EUR 0.6498 -0.0008 -0.12%
GBP 0.5633 -0.0002 -0.04%
HKD 5.4664 0.0089 0.16%
JPY 78.0520 -0.1770 -0.23%

Commods

Commodity Price Change Time
Gold Index 1225.8 -8.270 2017-02-13T00:
Oil Brent 55.6 -1.050 2017-02-13T00:
Oil Nymex 53.0 -0.900 2017-02-13T00:
Silver Index 17.8 -0.110 2017-02-13T00:

Indices

Symbol Open High Last %
NZX 50 7140.7 7174.6 7135.5 0.40%
NASDAQ 5753.2 5771.0 5734.1 0.52%
DAX 11698.0 11812.7 11667.0 0.92%
DJI 20338.5 20441.5 20269.4 0.70%
FTSE 7258.8 7298.5 7258.8 0.28%
HKSE 23695.3 23735.1 23711.0 0.02%
NI225 19478.9 19501.0 19459.2 -0.16%
ASX 5760.7 5794.9 5760.7 0.05%