Monday 01 May 2017 08:40 AM
NZ dollar near 10-month low as US growth ahead of Fed meeting
By Paul McBeth
May 1 (BusinessDesk) – The New Zealand dollar traded near a 10-month low after data showed sluggish consumer spending weighed on US economic growth, ahead of the Federal Reserve’s monetary policy meeting this week which will include an update on the economy.
The kiwi traded at 68.56 US as at 8am in Wellington from 68.66 cents on Friday in New York, hovering near the 68.45 cents low it reached on Thursday. The trade-weighted index declined to 74.55 from 74.72 last week.
New Zealand’s dollar fell 1.5 percent against the greenback in April, a month when heightened uncertainty in the global environment kept markets volatile. The greenback has been benefiting from expectations the world’s biggest economy’s strength will spur higher interest rates. Figures last week showed gross domestic product grew at an annualised rate of 0.7 percent in the March quarter, falling short of forecasts on weaker consumer spending, while labour data showed rising employment costs ahead of the Fed’s policy review this week.
„The market appeared to brush off the weaker headline US GDP report after underlying details gave a better forward-looking picture,” ANZ Bank New Zealand chief economist Cameron Bagrie said in a note.
Bagrie said if the kiwi’s decline below 68.60 US cents is sustained, it could push to mid-66 cents. „This weakness is at odds with local data, but global nuances are dominating. The finger can partly be pointed at protectionist nuances.”
The local currency was little changed at 52.96 British pence from 53 pence on Friday in New York after figures showed the UK economy grew slower than expected and as British leaders reached an agreement with their European Union counterparts on formal guidelines for Brexit talks. The kiwi fell to 62.80 euro cents from 63 cents last week.
The New Zealand dollar traded at 91.74 Australian cents from 91.63 cents last week and fell to 4.7238 Chinese yuan from 4.7307 yuan. It dropped to 76.28 yen from 76.58 yen last week.