Dollar remains steady ahead of US Fed policy meeting

This results comes before a two-day meeint of the the Federal Open Market Committee. Photo/File.

The New Zealand dollar was little changed, having climbed about 1 percent last week, as the market awaits Janet Yellen's last policy meeting as chair of the US Federal Reserve and figures on Friday expected to show a shrinking US jobless rate.

The kiwi traded at 73.42 US cents as at 8:30am in Wellington from 73.53 cents in New York on Friday. The trade-weighted index slipped to 74.66 from 74.71.

The Federal Open Market Committee will conclude its two-day meeting on Wednesday, the last one with Yellen as chair before Jerome Powell takes over. While the FOMC is not expected to announce a rate hike on Wednesday, it is widely expected to raise its target rate during its March meeting. Meantime, US nonfarm payrolls probably grew by 175,000 jobs in the latest month while the unemployment rate fell to 4 percent, economists forecast. Little local economic data is scheduled for this week.

"The FOMC is expected to play a straight bat, with the market convinced that the Fed will hold off another rate hike until the March meeting," said Jason Wong, currency strategist at Bank of New Zealand, in a note. On Friday, "The USD ended the week on a soft note helping to propel US equities to another record high, while global bond rates drifted higher."

Trading may be relatively subdued in New Zealand until Asia wakes up, with the Auckland anniversary day holiday keeping some participants at home.

The local currency has gained 3.5 percent so far this year as heightened political uncertainty has left the greenback out of favour with a brief US federal government shutdown, introduction of trade tariffs and looming debt ceiling. The greenback came under greater scrutiny last week when Treasury Secretary Steven Mnuchin said a weaker currency was good for trade, comments US President Donald Trump later said were taken out of context when advocating a stronger greenback under his administration.

The local currency traded at 90.55 Australian cents from 90.69 cents in New York on Friday It fell to 4.6388 Chinese yuan from 4.6470 yuan, decreased to 59.12 euro cents from 59.18 cents and traded at 51.88 British pence from 51.915 pence. It traded at 79.83 yen from 79.87 yen last week.