New Zealand dollars hits 15 month low

The New Zealand dollar touched a 15-month low Monday after data showed that the country's central bank sold large amounts of the currency in August, increasing expectations of further intervention.

The Reserve Bank of New Zealand sold a net 521 million New Zealand dollars (US$406.4 million) in August--the most since July 2007 and significantly more than the NZ$2 million it sold in July this year, data released by the central bank showed.

The currency fell sharply after the data's release, touching US$0.7708--its weakest since late June 2013--from around US$0.7828 just prior to the release.

The central bank "put its money where its mouth is" by selling the currency, ASB Chief Economist Nick Tuffley said. "We don't rule out further tactical actions from the RBNZ to keep downward pressure on the New Zealand dollar."

The RBNZ has said on several occasions that the New Zealand dollar, known as the kiwi, was unjustifiably strong even given the country's relatively strong economy. Market participants have interpreted the statements as indications that the central bank was prepared to intervene to weaken the kiwi.

Prime Minister John Key, a former currency trader, earlier said he supported the central bank intervening in the market, suggesting the New Zealand dollar should be around US$0.6500.

The kiwi's strength is largely the result of a relatively strong economy that has outperformed those of most other developed nations since the global financial crisis. The South Pacific nation, with a population of just 4.5 million, has benefited from booming Asian demand for its meat and dairy exports, and the pace of its economic growth is now at a 10-year high.

New Zealand is also among the few countries to have begun a cycle of interest-rate increases--four so far this year--helping fuel demand for the Kiwi.

Still, cracks are starting to show in the economy. Among the biggest concerns is a sharp decline in prices of dairy, the country's largest export sector.

Theo Spierings, chief executive at dairy giant Fonterra Co-Operative Group, said any fall in the New Zealand currency was going to help exporters.

Source: marketwatch.com

Dollar down after 10-week rally!

Euro gains capped

The dollar slipped in Asia Tuesday following a 10-week rally, while gains in the euro were capped by concerns about slackening European economic growth.

The greenback bought 108.74 yen in Singapore afternoon trade against 108.94 yen in New York late Monday. The euro rose to $1.2851 from $1.2850, while slipping to 139.72 yen from 139.78 yen.
Japanese financial markets are closed for a public holiday.

The dollar's upward momentum has taken a breather after last week hitting highs above 109 yen not seen since August 2008.

The gains came after the the Federal Reserve hinted that interest rates could rise further than expected when they are eventually hiked, probably in mid-2015.

Singapore's United Overseas Bank said the dollar was facing some selling in Asian trade after a "surprisingly weak set of US housing data" released on Monday.

The National Association of Realtors said existing-home sales in the US fell 1.8 percent in August, following four straight months of gains.

The euro saw an uptick in Asia after hitting 14-month lows a day earlier as traders digested a speech by European Central Bank chief Mario Draghi to the European Parliament.

Draghi dismissed market disappointment about demand from banks for a new lending programme launched last week, saying it was on track to pump more liquidity into the financial system but needed time to take full effect.

He noted that the eurozone recovery was sputtering but said the central bank would keep its accommodative monetary policy in place for some time.

The dollar rose against most Asia-Pacific currencies.

It climbed to Sg$1.2672 from Sg$1.2655 in Tokyo on Monday, to 11,978 Indonesian rupiah from 11,961 rupiah, to 60.89 Indian rupees from 60.77 rupees, and to 44.57 Philippine pesos from 44.42 pesos.

It rose to Tw$30.23 from Tw$30.19 while easing to 1,040.64 South Korean won from 1,040.75 won.

The Australian dollar stood at 89.08 US cents from 89.36 cents, while the Chinese yuan bought 17.71 yen from 17.70 yen.

Source: yahoo.com

Dollar Gauge Set for Highest Close

Yen Drops

The dollar was set for the highest closing level in four years versus major peers after Federal Reserve officials raised their target-rate forecast. The yen slid to a six-year low before the Bank of Japan governor speaks.

The greenback returned to levels unseen since the collapse of Lehman Brothers Holdings Inc. after Fed policy makers increased their median estimate for the key rate to 1.375 percent at the end of 2015 versus June's forecast for 1.125 percent. The pound remained higher as Scotland votes today on independence. The euro touched its weakest since July 2013 with the European Central Bank preparing to allot the first funds under its so-called targeted longer-term refinancing operations.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, rose 0.2 percent to 1,055.71 as of 1:33 p.m. in Tokyo, poised for the highest closing level since June 2010.

The U.S. currency climbed to 108.75 yen, the strongest since Sept. 8, 2008, before trading 0.3 percent higher at 108.67. It was little changed at $1.2864 per euro and touched $1.2835, the most since July 2013.

Considerable Time

The Federal Open Market Committee retained a commitment to keep interest rates near zero for a “considerable time” after winding down a bond-purchase program under the quantitative-easing stimulus strategy. It said in a statement a “significant underutilization of labor resources” remains.

Policy makers tapered monthly bond buying to $15 billion in their seventh consecutive $10 billion cut, staying on course to end the program in October.

Yellen, at a press conference after the two-day meeting, said the language of the low-rate pledge isn’t a form of calendar-based guidance. The odds the central bank will increase its benchmark interest-rate target to at least 0.5 percent by July 2015 were 78 percent, up from 73 percent at the end of last month, federal fund futures showed.

An interest-rate increase would be the first since 2006. The rate has been in a range of zero to 0.25 percent since December 2008.

Kuroda Speaks

BOJ Governor Haruhiko Kuroda is scheduled to speak today at the National Securities Industry Convention in Tokyo. A stronger dollar isn’t negative for Japan’s economy and the central bank will continue unprecedented monetary stimulus as long as necessary to achieve its target of 2 percent inflation “in a stable manner,” Kuroda said Sept. 16 in Osaka.

The pound held a gain since Sept. 15 before voters in Scotland decide today on the future of a political union that dates back to 1707. Voting ends at 10 p.m. local time. A final batch of opinion polls before the referendum showed the “no” campaign remained in the lead by a slim margin.

“Uncertainty around the final result is mounting,” Shinichiro Kadota, a foreign-exchange strategist at Barclays Plc in Tokyo, wrote in an e-mailed note to clients today. “GBP will likely rebound further in case of a ‘No’ vote, though it has already seen some rebound in the past few days, while a ‘Yes’ vote would likely exert further downward pressure.”

ECB Loans

Sterling was little changed at $1.6265 after climbing 0.3 percent since Sept. 15 through yesterday to $1.6276.

The ECB will announce today the allotment of its first targeted lending program as part of its effort to stave off deflation in the euro area. Banks will receive 150 billion euros ($193 billion), according to the median estimate of analysts surveyed by Bloomberg News.

New Zealand’s currency added 0.2 percent to 81.09 U.S. cents. The nation’s economy grew at the fastest pace in 10 years in the second quarter, outperforming most major developed markets. Gross domestic product increased 3.9 percent in the second quarter from a year earlier, Statistics New Zealand said today. That beat the 3.8 percent median forecast in a Bloomberg survey of 10 economists.

Source: bloomberg.com