The NZDUSD opens at 0.7004 (mid-rate) this morning.
The Kiwi has rallied 40+ points immediately following the Fed Rate hike, which is up 70+ points or over 1% from yesterday’s open.
The U.S. Fed has raised rates for only the third time in a decade by 0.25% to 0.75% as widely expected.
The key headline points are:
- 9 of the 17 Fed Policymakers see 3 rate hikes in 2017 (2 more to come)
- Sees slightly faster pace of interest rate hikes in 2019, views for 2018, longer-run unchanged
- Expects economic conditions will evolve in way that warrants "Gradual increases" in Fed funds rate; previously signalled "Only gradual increases"
- Fed vote in favour of policy was 9-1; Kashkari dissented because he did not want to raise rates
- Business fixed investment appears to have firmed somewhat
- Inflation moving close to target; committee expects it will "Stabilize around" 2% over medium term
- Will carefully monitor inflation developments relative to its symmetric inflation goal
- Slightly lowers view of longer-run jobless rate to 4.7% from 4.8%
- Fed repeats near-term risks to the economy appear "Roughly balanced"
- Fed repeats that job gains remain solid; says jobless rate little changed in recent months
- Fed repeats it will reinvest principal payments from its holdings until rate normalization is well under way
Global equity markets are higher overnight: Dow +0.17%, S&P +0.23%, FTSE +0.15%, DAX +0.18%, CAC +0.23%, Nikkei -0.16%, Shanghai +0.08%.
Gold prices are up $9 or 0.7% currently trading at $1,212 an ounce, WTI Crude Oil is up 2.0% currently trading at $48.47 a barrel.
Current indicative rates:
NZDUSD 0.7004 1.1%
NZDEUR 0.6550 0.4%
NZDGBP 0.5703 0.2%
NZDJPY 79.62 0.3%
NZDAUD 0.9118 -0.4%
NZDCAD 0.9372 0.3%
Upcoming Data releases (NZST):
- 10:45am - NZD - GDP q/q
- 1:00pm - AUD - MI Inflation Expectations
- 1:30pm - AUD - Employment Change
- 1:30pm - AUD - Unemployment Rate
- 1:30pm - AUD - RBA Bulletin
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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