The NZDUSD opens at .6348 (mid-rate) this morning.
The NZDUSD traded in a 130 point range the past 12 hours. The Fed elected to leave interest rates unchanged, although they did say there was some argument for raising rates now.
The NZD was volatile in both directions immediately after the ‘no change’ announcement, then subsequently posted a strong rally when Fed Chairperson Janet Yellen spoke at the press conference.
The NZDUSD topped out at 0.6440, then turned tail and dropped quickly during the Q&A session after Yellen’s prepared comments.
The Fed’s justification for no increase in interest rates included global economic headwinds, volatility in the stock market and extremely low inflation.
The vote to leave interest rates unchanged was 9-1. The dissenting vote came from Richmond Fed President Jeffrey M. Lacker, who preferred to raise the target range for the federal funds rate by 25 basis points at this meeting.
Most Fed officials have said that a rate hike would be appropriate this year given the recent pace of economic activity, but couldn't pull the trigger at this two-day meeting.
For the first time, the Fed added the phrase that it was "monitoring developments abroad," probably spooked by recent developments in China.
Initial jobless claims fell to 264,000, a decrease of 11,000 from the previous week's unrevised level of 275,000. Economists had expected jobless claims to come in unchanged.
U.K. retail sales grew for the first time in three months in August as school uniform sales boosted clothing turnover. At +0.2% that matched economists' expectations.
Japan posted a merchandise trade deficit of 569.659 billion yen in August, missing forecasts for a shortfall of 542.5 billion yen following the 268.4 billion yen deficit in July.
Global equities were mixed across the board : Dow -0.39%, S&P 500 -0.26%, FTSE -0.68%, DAX +0.02%, CAC +0.20%, Nikkei +1.43%, Shanghai -2.15%.
Gold prices were up 1.1%, trading at $1131.20 an ounce, WTI Crude Oil is up $2.31 to $46.81 a barrel.
Indicative mid rates:
NZDUSD 0.6348 -0.2%
NZDEUR 0.5550 -1.5%
NZDGBP 0.4069 -0.9%
NZDJPY 76.18 -0.7%
NZDAUD 0.8847 0.1%
NZDCAD 0.8363 -0.3%
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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