The New Zealand dollar jumped about half a US cent after the Federal Reserve kept interest rates unchanged and was cautious about the pace and timing of any future hikes.
The kiwi rose to 69.02 US cents as at 8.30am in Wellington from 68.34 cents immediately before the release, and up from 68.39 cents yesterday. The trade-weighted index gained to 74.19 from 73.78 yesterday.
The Federal Open Market Committee kept the federal funds rate target range of 2.25-2.5 per cent, saying sustained economic growth, a strong labour market, and a 2 per cent pace of core inflation was the most likely outcome. The FOMC will be patient in deciding any future hikes, given the uncertainty in the global economy and muted inflation pressures. The Fed pared back a more aggressive stance on rate hikes late last year after chair Jerome Powell faced intense pressure from US President Donald Trump to keep rates low. Powell will hold a press conference after every meeting this year.
The Fed also changed its policy in unwinding the massive stimulus programme run over the past decade, saying it's willing to alter the pace of shrinking the balance sheet to meet any economic and financial developments. However, it kept its current US$50 billion monthly runoff of Treasury bonds and mortgage-backed securities unchanged.
"Don't expect anything out of the Fed in the first half - patience is the name of the game here," said Martin Rudings, a foreign exchange dealer at OMF. "It's definitely signalling they're on hold" and the kiwi's rise is more of a US dollar move.
Global tensions between the US and China continue to vex investors, with some companies noting a slowing Chinese economy in earnings downgrades. US and Chinese officials are continuing their trade talks, with the protection of intellectual property a key issue for the US.
No local data is scheduled for today.
The kiwi traded at 95 Australian cents from 95.08 cents yesterday, and gained to 4.6329 Chinese yuan from 4.5926 yuan. It rose to 75.17 yen from 74.79 yen. The local currency advanced to 52.56 British pence from 52.27 pence yesterday and increased to 60.07 euro cents from 59.79 cents.