NZ dollar rises

australian-and-new-zealand-dollarThe New Zealand dollar has gained, although it remains within this week’s narrow trading range pending an announcement on the next government, after minutes of the last Federal Reserve meeting showed concerns about weak inflation.

The kiwi rose to US70.91 cents as at 0800 on Thursday in Wellington from US70.75c late Wednesday. The trade-weighted index was at 74.66 from 74.59.

The New Zealand dollar has traded in a range of less than half a US cent this week, remaining near its lowest levels in more than four months as the market awaits the decision of the NZ First Party that will determine the next government.

Meanwhile, the minutes of the Fed’s September meeting said many of those at the policy meeting “expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent”.

“The minutes didn’t surprise and market reaction was fairly muted,” BNZ currency strategist Jason Wong.

“The odds of another Fed hike in December remained steady around 75 per cent after the minutes were released.”

Commenting on the broadly weaker kiwi dollar in the wake of the political negotiations, Wong said as the talks had progressed it seemed that traders were reducing their NZD exposure, “nervous of the outcome and what agreed policies might emerge”.

On Thursday morning, the New Zealand dollar fell to 59.77 euro cents and earlier touched 59.61c, the lowest in 17 months, from 59.91c on Wednesday amid speculation the European Central Bank is closer to unwinding some of its ultra-loose monetary policy settings.

The kiwi was little changed at 53.60 British pence and also little changed at 90.94 Australian cents from A90.90c. It was up to 79.68 yen from 79.56 yen and increased to 4.6709 yuan from 4.6677 yuan.

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