Dollar dips vs yen, kiwi rises on RBNZ Wheeler’s comments

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Washington | Published: August 23, 2016 10:00:04 AM

The dollar dipped against the yen early on Tuesday, while the New Zealand dollar rose after the nation's central bank chief said he did not see the need for a rapid succession of interest rate cuts.

The dollar dipped against the yen early on Tuesday, while the New Zealand dollar rose after the nation's central bank chief said he did not see the need for a rapid succession of interest rate cuts. (Reuters)The dollar dipped against the yen early on Tuesday, while the New Zealand dollar rose after the nation’s central bank chief said he did not see the need for a rapid succession of interest rate cuts. (Reuters)

The dollar dipped against the yen early on Tuesday, while the New Zealand dollar rose after the nation’s central bank chief said he did not see the need for a rapid succession of interest rate cuts.

The dollar shed 0.2 percent to 100.120 against the safe-haven yen amid a pullback in Tokyo stocks.

The greenback had risen to almost 101.00 yen overnight following hawkish-sounding comments by Federal Reserve Vice Chair Stanley Fischer before it lost steam.

The euro edged up 0.1 percent to $1.1332, stepping off an overnight low of $1.1271.

While views expressed by various Fed officials over the past week have impacted the dollar, a wait-and-see mood has begun to take hold ahead of possibly the most decisive speech of them all – by Fed Chair Janet Yellen on Friday.

Yellen will speak at the annual meeting of world central bankers in Jackson Hole, Wyoming.

Over the immediate horizon, the market is looking for catalysts from the euro zone and U.S. purchasing managers index (PMI) data and U.S. home sales numbers due later in the session.

“So far data from the Eurozone has been relatively healthy and regional officials believe the impact of Brexit on their local economies will be limited. Considering that U.K. PMIs took a nosedive recently, investors will be watching the Eurozone PMIs carefully,” wrote Kathy Lien, managing director of FX strategy at BK Asset Management.

The New Zealand dollar was up 0.6 percent at $0.7312 after Reserve Bank of New Zealand Governor Graeme Wheeler said the current interest rate track involves further monetary easing but did not see the need for a rapid series of rate cuts.

The kiwi rose to a 15-month high of $0.7351 mid-month, as it has proved resilient to falling cash rates at home given they remain far higher relative to those of other developed economies.

“We remain committed to the inflation goals in the Policy Targets Agreement. We do not believe that the outlook and balance of risks warrants a position of no policy change, nor a position of rapid easings,” Wheeler said in a speech which was released on the RBNZ’s website.

The RBNZ in early August cut interest rates by 25 basis points to a record low of 2.0 percent and said further policy easing may be needed.

The Australian dollar was up 0.2 percent at $0.7642 , moving up on the coattails of the kiwi.

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