THE New Zealand dollar was trading significantly higher towards the end of the week after Reserve Bank of New Zealand Governor Graeme Wheeler crushed expectations of a rate cut. Holding the Official Cash Rate constant at a rate of at 2.5%
Governor Graeme Wheeler was cited as saying that the Official Cash rate would remain stable for quite some time and that the Reserve Banks forecasts do not predict an increase until 2014. They are forecasting annual inflation to remain close to the bottom band in the upcoming year, with a two percent increase predicted for March 2015.
The Kiwi has been further buoyed by the announcement by dairy giant Fonterra Co-Operative Group, that they have increased their forecasted payouts to farmers for the period ending May 2013. Adding to the climb in the New Zealand dollar was the better than expected payroll data released on Friday.
Markets will again focus on the Euro in the weeks ahead as the Italian Prime Minister Mario Monti announced on Saturday that he intends to resign early. This has created rising uncertainty over who will succeed him.
The Federal Open Market Committee’s meeting is scheduled to commence on Tuesday, market sentiment is that the Fed will announce yet another round of quantitive easing. Senior Market Strategist at Westpac Banking Corp. Imre Speizer was cited as saying that he sees the Fed replacing Operation Twist with outright purchases of treasuries or mortgage backed securities or both.
Composed by Monique Chapman
Exchange rates as of 06:58 10 December 2012
NZD/ GBP: 0.5191
NZD/ EUR: 0.6440
NZD/ USD: 0.8325
NZD/ JPY: 68.6716
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