The New Zealand Dollar was little moved against the US Dollar, Pound and other major peers on Monday as investors forecast that Federal Reserve Chairman Janet will say that the US economy will need stimulus measures for a longer period.
The Fed chairman is due to testify to Congress on Tuesday and investors will keeping a close eye on her comments for any hints that the world’s largest economy could be edging closer to raising interest rates.
If Yellen does as expected and say that stimulus will be needed for an extended period we can expect the ‘Greenback’ to weaken further against the ‘Kiwi’ and other peers such as the ‘Aussie’.
“If Yellen comes out with a comment that implies the first fed funds rate hike might not be until the second half of next year, we’ll probably see US Dollar weakness and in the hunt for yield, the ‘Kiwi’ may try at that high,” said Peter Cavanaugh, client adviser at Bancorp Treasury Services.
The ‘Kiwi’ could also find support from the latest inflation data due tomorrow. If it comes in strongly then we can expect the currency to push higher.
A strong report will also increase economist expectations that the Reserve Bank of New Zealand will raise interest rates later this month.
With no domestic data due out of the UK the New Zealand Dollar was little changed against the Pound. Against the Euro the ‘Kiwi’ found support after data showed that industrial production in the Eurozone slumped in May.
The European Union’s statistics agency Monday said output from factories, mines and utilities fell by 1.1% from April, although it was up 0.5% from May 2013. That was the largest month-to-month drop since September 2012.
GDP data out of China on Wednesday could add further support to the New Zealand currency.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8808 ,
New Zealand Dollar,, Pound Sterling,0.5148 ,
New Zealand Dollar,,Euro,0.6464 ,
New Zealand Dollar,,Australian Dollar,0.9379 ,
Euro,,New Zealand Dollar ,1.5462 ,
US Dollar,,New Zealand Dollar ,1.1353 ,
Australian Dollar,,New Zealand Dollar ,1.0656 ,
Pound Sterling,, New Zealand Dollar ,1.942` ,
[/table]
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