NZ dollar pares gains after Bernanke fails to signal QE3   8 Jun 2012

Hannah Lynch

The New Zealand dollar fell from a one-month high after Federal Reserve Chairmen Ben Bernanke failed to signal further quantitative easing for the US, damping kiwi sentiment that had been lifted by China's unexpected interest cuts.

The New Zealand dollar fell to 76.65 US cents from 77.05 cents at 5pm yesterday. It rose as high as 77.52 US cents overnight, the highest since May 11 on speculation a Chinese rate cut will underpin the world’s fastest-growing major economy. The trade weighted index decreased to 69.90 from 70.07.

The New Zealand dollar rallied after China, New Zealand's second-largest export market, unexpectedly cut its interest rate to 0.25 percent, effective tomorrow. That's the first time the People's Bank of China has cut rates since 2008. Bernanke helped erase the kiwi's advances after signaling the world's largest economy remains at risk from Europe's debt crisis, even as he failed call to for consideration of additional stimulus.

"Broadly speaking the good cancelled out the bad leaving the New Zealand dollar where we were yesterday," said Mike Jones, market strategist at Bank of New Zealand. "Bernanke caused some late US dollar strength.”

Bernanke's comments were at odds with Fed Reserve Vice Chairman Janet Yellen's speech on Wednesday. Yellen said the US “remains vulnerable to setbacks” and may warrant more accommodation.

The Federal Open Market Committee will meet on June 19-20. Earlier this year the committee pledged to keep interest rates low until at least 2014.

The kiwi to fell to 77.53 Australian cents from 77.43 cents yesterday at 5pm after New Zealand's largest trading partner unexpectedly added 39,000 jobs in May. That comes just one day after Australia posted annual gross domestic product growth of 4.3 percent, beating economists' forecasts.

The Reserve Bank of Australia decision this week to cut the target cash rate a quarter point to 3.5 percent has also buoyed sentiment for Australia’s currency.

“For today, the NZD will continue to look across the Tasman for direction," Jones said.

Australian trade balance figures are set for release, while RBA Governor Glenn Stevens is scheduled to make a speech this afternoon.

In New Zealand, the March quarter’s wholesale trade survey will be release by Statistics New Zealand this morning.

The New Zealand dollar fell to 61.10 euro cents from 61.33 cents yesterday at 5pm. The kiwi dropped to 49.44 British pence from 49.81 pence and was little changed on 61.09 yen from 61.16 yen.

(BusinessDesk)

Add a comment

Bookmark and Share

News

2017 Budget to be presented on 25 May

8 Feb 2017 Financial
7 Feb 2017 The Government's 2017 Budget will be delivered on Thursday 25 May, and will be centred on providing opportunities for all... more

Conservation efforts underway on Scott Statue

6 Feb 2017 Environment
9 Feb 2017 A hundred years on from its unveiling, conservation efforts are underway to repair and reinstate the white marble statue of... more

Business

Finance Minister requests cost-benefit analysis on DTIs

8 Feb 2017 Business News
8 Feb 2017 A full cost-benefit analysis on Debt-to-Income (DTI) limits and public consultation will be conducted by the Reserve Bank... more

Korean FTA delivers new round of tariff cuts

18 Jan 2017 Business News
8 JANUARY, 2017More local businesses looking to expand into Korea will benefit from the latest round of tariff reductions under the... more

Living

3rd Position, Louis Vuitton America’s Cup World Series

21 Nov 2016 Lifestyle
Emirates Team New Zealand EMIRATES TEAM NEW ZEALAND CLOSES IN 3rd POSITION THE LOUIS VUITTON AMERICA’S CUP WORLD SERIES more

Arts Foundation Award recipients for 2016

14 Nov 2016 Lifestyle
The Arts Foundation Next generation of internationally acclaimed talent among the Arts Foundation Award recipients for 2016Under ... more

Property

NZ house prices gain 11% in October

14 Nov 2016 Property
Article - BusinessDesk Monday 14 November 2016 10:28 AM NZ house prices gain 11% in October, driven by sales of higher value homes By... more

RBNZ sees pressures building in Auckland construction sector

11 Nov 2016 Property By Paul McBeth
Article - BusinessDesk Thursday 10 November 2016 04:04 PM RBNZ sees pressures building in Auckland construction sector By Paul ... more

Migration

Recognised Seasonal Employers employ more Kiwis

8 Feb 2017 Migration
7 Feb 2017 Immigration Minister Michael Woodhouse welcomes a report showing the vast majority of employers who take on seasonal... more

Good progress on investment attraction strategy

8 Dec 2016 Migration
Economic Development Minister Steven Joyce has welcomed news that New Zealand is attracting a higher level of quality international... more

Travel

Weirdest things visitors Google before coming

6 Feb 2017 NZ Tourism
8 Feb 2017 Does New Zealand celebrate halloween?  Is Auckland a dangerous town- these are some of the subjects visitors Google... more

New campaign to get more Aussies to Northland

30 Jan 2017 Travel & Tourism
30 January 2017 A new marketing campaign starting this week to attract Australians to Northland is an excellent approach to... more

Sport

Silver Ferns wrap up Quad Series with big win

6 Feb 2017 Netball
6 Feb 2017 The Silver Ferns finished runners-up in the Netball Quad Series after completing a well-crafted 70-39 win over the SPAR... more

Silver Ferns bounce back against England February 3, 2017

3 Feb 2017 Netball
The Silver Ferns completed a dominant outing to post a 61-37 win against the England Roses in their second match of the 2017 Netball... more

Columns

Gordon Campbell on the Gareth Morgan crusade

11 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the Gareth Morgan crusade First published on Werewolf more

Gordon Campbell on the US election outcome

10 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the US election outcome more

Kiwi Success

Spencer to be Acting Governor of Reserve Bank

8 Feb 2017 Appointments
7 Feb 2017 Finance Minister Steven Joyce will appoint current Deputy Reserve Bank Governor Grant Spencer as the Acting Governor of... more

Temporary Chairs appointed to Canterbury and South Canterbury DHB

1 Feb 2017 Appointments
30 January 2017 Health Minister Jonathan Coleman has today appointed temporary Chairs to the boards of Canterbury and South... more

Recruitment

Record number of people in employment

1 Feb 2017 Recruitment
1 Feb 2017 Tertiary Education, Skills and Employment Minister Paul Goldsmith has welcomed the record number of New Zealanders now in... more

NZ Government accepts recommendations on pay equity

8 Dec 2016 Recruitment
Hon. Paula Bennett,  Hon. Michael Woodhouse, Hon. Louise Upston 24 November, 2016 The Government will update the Equa... more

s