NZ dollar holds up after US Fed's gloomy assessment

The kiwi was trading at 66.44 US cents at 5pm. Photo / 123RF

The New Zealand dollar was steady against the greenback after the US Federal Reserve delivered a gloomy economic assessment and pledged to do all it can to cushion the impact.

The kiwi was trading at 66.44 US cents at 5pm in Wellington from 66.50 cents at the same time yesterday while the trade-weighted index was at 72.23 from 72.39.

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Fed chair Jerome Powell said the US was suffering the most severe economic downturn "in our lifetime" and that "we're not even thinking about thinking about thinking about raising rates."

Powell also noted that the US recovery appeared to have stalled in June when the number of Covid-19 infections began to climb again.

More than 1.5 million people in the US are reported to have been infected and more than 150,000 people have died from the virus, accounting for roughly a quarter of the global impact.

Mike Shirley, a dealer at Kiwibank, said trading had been choppy both before and after the Fed's comments but the kiwi remains very much within its recent range.

"There's a lot going on globally but we haven't seen, outside of the Fed this morning, any data or big drivers from an economic perspective," Shirley said.

"The more interesting aspect for the NZ dollar today, and most of this week, has been the kiwi crosses – it's underperformed against the other majors," he said.

For example, the NZ dollar was trading at 92.62 Australian cents from 92.88 cents at 5pm yesterday and as high as 93.66 cents on Monday, July 27.

The US dollar is trading at two-year lows as the market awaits another fiscal stimulus bill from US lawmakers who appear to be a long way from reaching agreement.

Shirley said the market is starting to focus on the next local monetary policy statement due on Aug. 12 and wondering what will become of the central bank's pledge to keep interest rates low, to keep printing money and the possibility of negative interest rates.

The NZ dollar was trading at 69.81 yen from 69.88 yen, at 56.44 euro cents from 56.70 cents, 51.20 British pence from 51.48 pence, and 4.6490 Chinese yuan from 4.6576 yuan.

The bid-price on the two-year swap rate was at 0.1830 per cent from 0.1875 per cent yesterday while the 10-year swap was at 0.6600 per cent from 0.6300 per cent.