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18 Apr 2014 22:34
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  •   Home > News > Business

    NZ dollar yo-yos after Bernanke comments

    The NZ dollars retreats from its three-week high against the greenback after traders digest comments from Fed Reserve chairman Ben Bernanke.


    The New Zealand dollar gave up Thursday's gains after traders decided comments by Federal Reserve chairman Ben Bernanke were not as dovish as initially thought and were more a reiteration of his previous stance.

    The kiwi fell to 78.54 US cents, from 79.52 cents at the 5pm market close in Wellington on Thursday.

    The local currency is trading where it was before Bernanke's comments prompted a surge to a three-week high of 79.68 cents. The trade-weighted index slid to 74.41 from 75.10.

    Investors sold the greenback on the expectation the Fed wouldn't pull back on its $US85 billion ($NZ107 billion) a month asset purchase programme any time soon after Mr Bernanke said the US economy still needs "highly accommodative monetary policy for the foreseeable future".

    The US dollar is back in favour as investors realised withdrawing stimulus was always dependent on economic data.

    "It really is just related to the market taking profit and really looking at what Bernanke said and understanding that he hasn't changed anything, he has just reiterated the Fed's stance," said Stuart Ive, senior client advisor foreign exchange and derivatives at OM Financial.

    In the US, traders will be watching for comments on the future path of monetary stimulus from Fed officials John Williams, James Bullard and Charles Plosser.

    The New Zealand dollar weakened to 77.41 yen from 78.50 yen after the Bank of Japan held monetary policy unchanged as expected.

    The yen strengthened after the central bank referred to the economy as "recovering" for the first time since before the 2011 earthquake.

    The kiwi slid to 85.27 Australian cents from 85.64 cents while it fell to 59.76 euro cents from 60.55 cents and dropped to 51.52 British pence from 52.48 pence.


    NZN




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