NZ dollar jumps

new zealand dollar3The New Zealand dollar surged about US1 cent after the US Federal Reserve raised interest rates and reiterated that it sees further “gradual increases”.

The kiwi dollar rose to US70.24 USc as at 0800 in Wellington, and earlier reached 70.39c, from 69.31c late on Wednesday. The trade-weighed index rose to 76.48 from 75.97.

The Fed raised the fed funds rate by a quarter point to a range of 0.75 per cent to 1 per cent as expected and kept to its projection for two more increases this year, saying “gradual adjustments” will allow economic activity to grow “at a moderate pace”.

The US dollar fell to its lowest level in more than three weeks.

Locally, traders are awaiting fourth-quarter gross domestic product, with a 0.7 per cent rate forecast, a slowdown from the third quarter’s 1.1 per cent expansion.

“With the Fed statement and projections less hawkish than some feared, the US dollar major currency index fell after the announcement,” Bank of New Zealand currency strategist Jason Wong said in a note.

“Today we think that the risks are weighted towards fourth-quarter GDP coming in softer than market expectations. Any New Zealand dollar dip on the result wouldn’t be expected to be sustained, as the data are fairly dated and we still think that the NZ economy is in good shape.”

The pace of potentially market-moving events picks up through the week, with Dutch elections underway, statements due from the Bank of Japan, Bank of England and Swiss National Bank, and Australian labour market data.

The kiwi dollar rose to 65.68 euro cents from 65.29 cents and gained to 57.19 British pence from 57.02 pence. It slipped to A91.33c from A91.56c and rose to 4.8558 yuan from 4.7931 yuan. It traded at 79.72 yen from 79.60 yen on Wednesday.

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