NZ dollar pares loss as US election raises questions for Fed   8 Oct 2012

NZ dollar pares loss as US election raises questions for Fed

By Paul McBeth

Oct. 8 (BusinessDesk) - The New Zealand dollar pared its loss from Friday when strong US jobs figures stoked demand for the greenback, with the possibility of a new US President raising question marks over the US Federal Reserve's monetary policy under a new administration.

The kiwi rose to 81.77 US cents at 5pm in Wellington from 81.60 cents at 8am and almost unchanged from 81.76 cents on Friday in New York. The trade-weighted index edged up to 73.06 from 72.89 last week.

Risk-sensitive currencies, such as the kiwi, sank on Friday after the US unexpectedly reduced its unemployment rate to 7.8 percent last month, the latest in a string of upbeat data emanating from the world's biggest economy. The momentum of the US economy and strong showing by Republican nominee Mitt Romney in the first Presidential debate has some traders contemplating the Fed's future monetary policy if there's a change in the White House.

Markets are pricing in the Fed lifting the Federal Funds Rate 16 basis points from its current zero to 0.25 percent range in the coming year, according to the Overnight Index Swap curve. The yield on US 10-year Treasuries rose 7 basis points to 1.743 percent on Friday.

If Romney wins and a new Fed chairman is appointed,

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