The New Zealand dollar rose, touching a fresh record against the Aussie dollar, after minutes of the Federal Reserve's last meeting suggested officials may favour keeping US interest rates lower for longer.
The kiwi jumped to 75.52 US cents at 8:30am in Wellington, from 75.17 cents ahead of the 8am release of the minutes, and 75.36 cents at 5pm yesterday. The local currency touched a fresh post-float high of 96.85 Australian cents following the minutes, and was trading at 96.47 cents at 8:30am from 96.61 cents at 8am and 96.31 cents yesterday.
The greenback weakened after the minutes from the Fed's last meeting on January 27-28 showed policy makers argued for keeping interest rates near record lows for longer as they weighed risks facing the US economy. The Federal Open Market Committee considered the risks to be "nearly balanced" but pointed to a stronger dollar, global tensions and slow wage growth as weakening the case for a rate rise.
"They are concerned about the timing of if and when they raise rates," said Stuart Ive, senior dealer, foreign exchange, at OMF. "The policy makers are looking for more evidence of continued growth. The market is a little bit surprised by the slight dovish tone in the minutes. It may suggest that for the time being they want to see some more data."
Still, Ive said there was plenty of time for the Fed to assess more data ahead of June when traders expect US interest rates to start rising.
