The New Zealand dollar rose after weaker US data raised concerns the Federal Reserve may push out plans to raise interest rates this year.
The kiwi advanced to 74.45 US cents at 8am in Wellington, from 74.19 cents at 5pm yesterday. The trade-weighted index was little changed at 76.70 from 76.75 yesterday.
The US dollar index, which measures the greenback against a basket of currencies, fell after a report showed a decline in US durable goods orders. The non-defence capital goods orders excluding aircraft, a proxy for business spending plans, fell 0.6 per cent in December following a similar drop in November. The data comes ahead of the Federal Reserve Open Market Committee's decision on interest rates, scheduled for release tomorrow morning New Zealand time.
"The US dollar weakened after weak durable goods data and as markets pared back positions ahead of the FOMC," ANZ Bank New Zealand senior economist Mark Smith and senior FX strategist Sam Tuck said in a note. "Weakness in durable goods data suggests that business investment likely contracted in the fourth quarter, which looks to slow growth momentum. The issue for markets and policymakers is the extent that the US economic expansion can roll on despite a number of headwinds.
"Sharp increases in the US dollar and weakness in global markets appear to be hitting the bottom line, with weaker than expected corporate earnings reported by a number of large US companies. While markets are worried lower earnings will feed into cuts to investment spending and layoffs, it is still early days. Markets await the FOMC tomorrow for direction."
