The New Zealand dollar gained as markets dial back their support for the US dollar as they await more information from the US Federal Reserve on its plans to shift away from running a zero interest rate policy.
The kiwi rose to 78.31 US cents at 8am in Wellington from 77.96 cents yesterday. The trade-weighted index was little changed at 77.19 from 76.17 yesterday.
Traders pared back their support for the greenback after its steady gain since the end of June, with the US dollar index, a measure against a basket of currencies, up as much as 8.7 percent. The Fed is scheduled to release minutes to the Federal Open Market Committee's September policy meeting on Wednesday in Washington, and the central bank completes its bond purchase programme tomorrow. The prospect of higher US interest rates has been a key driver for increased appetite for the greenback.
"We're still seeing profit-taking on the US dollar ahead of the FOMC," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "The kiwi's probably in for two to three weeks' worth" of consolidation, he said.
Kelleher said the local currency may trade between 78 US cents and 78.75 cents today with good demand on dips, and could push back up to 80 cents in coming weeks as traders rein in their support for the greenback.
