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NZ dollar rises after Fed decision, bonds softer
Thursday November 5, 09:20 AM
WELLINGTON, Nov 5 (Reuters) - The New Zealand dollar NZD= strengthened on Thursday after the Federal Reserve left interest rates unchanged, as expected, and said it intends to keep rates low for an extended period.
* Kiwi around $0.7289/94, compared with $0.7191/97 in late local trade on Wednesday. Trading was choppy initially after the Fed's rate decision as U.S. equities pared gains.
* Kiwi support returns as Wall Street resumed its climb back toward session highs. It hit an offshore high of $0.7312.
* U.S. dollar falls in choppy trading against the euro after the rate move. Low rates should ensure that the U.S. dollar will remain a funding currency in deals in which investors borrow in dollars to buy higher-yielding assets.
* NZ dollar has enjoyed steady support after Fonterra, NZ's top export earner, posted a 13.7 percent rise in dairy prices at its latest auction on Wednesday, fuelling speculation of a higher payout to NZ farmers. [ID:nWEL459929]
* The European Central Bank and the Bank of England also hold policy meetings later in the week. [ECB/INT] [BOE/INT]
* Kiwi firmer against the euro NZDEUR=R and the yen NZDJPY=R, while remains soft against the Aussie NZDAUD=R, keeping the trade-weighted index =NZD 0.7 percent higher.
* Focus on third-quarter jobs data on Thursday with expectations unemployment will rise to 6.4 percent from 6 percent. [NZ/POLL] The Reserve Bank of NZ governor also speaking at the Trans Tasman business Circle.
* Kiwi seen trading in wide ranges, with support near term seen at $0.7150 and resistance at $0.7360.
* Swaps higher, while NZ bonds a tad softer, after long-dated U.S. Treasury debt prices fell on the Fed move.
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