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NZ dollar little changed ahead of Fed meet

NZ Newswire logoNZ Newswire 14/03/2017 Rebecca Howard
New Zealand coin is arranged for a photograph in Wellington, New Zealand © Mark Coote New Zealand coin is arranged for a photograph in Wellington, New Zealand

The New Zealand dollar stuck to a very tight range on Tuesday as the two-day meeting by Federal Reserve policymakers is about to get underway, with all eyes on interest rate projections.

The kiwi dollar traded at US69.20 cents in Wellington, down from US69.35c late on Monday.

"The market is waiting, anxiously, for the Fed," said Westpac senior strategist Imre Speizer.

Given markets are widely expecting the US Federal Open Market Committee to lift the fed funds rate a quarter point to a range of 0.75 per cent to 1 per cent, the main focus will be on the so-called "dot plot", which it uses to signal its outlook for the path of interest rates, he said.

If the forecasts indicate two more rate increases there may be some US dollar profit-taking, which will benefit the kiwi, said Mr Speizer.

However, if they point to three further rate increases, the New Zealand dollar will fall.

Markets will also be watching for the Dutch election result, issues around Brexit and a Group of 20 finance ministers meeting in Germany late in the week.

Domestically he said the New Zealand dollar will likely have a short-term reaction to the fourth-quarter gross domestic product data due Thursday.

Westpac is expecting the economy to grow 0.5 per cent in the quarter while the median in a BusinessDesk poll of economists is for 0.75 per cent growth.

The kiwi dollar traded at 64.96 euro cents from 64.83c. It was at A91.54c versus 91.61c and 4.7852 yuan from 4.7900 yuan. It slipped to 79.42 yen from 79.61 yen and to 56.72 British pence from 56.94 pence.

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