WELLINGTON: New Zealand dollar rose as lower US wages caused investors to question how quickly the Federal Reserve will hike interest rates when it starts tightening monetary policy this year.
The kiwi increased to 78.54 US cents in Wellington from 78.38 cents and 78.35 cents in New York. The trade weighted index declined to 79.77 from 79.98 last week.
Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland said we saw markets refocusing on the fact that wage growth was negative in December and the general thinking is that the deflation pulse from global oil and commodity price declines gives the Fed more time to sit on their hands.
US, the world’s biggest economy added more jobs than expected in December and the unemployment rate fell to its lowest level since June 2008, though wages shrank for the first time in more two years.
The decline in hourly earnings caused investors to speculate the Fed may delay raising federal funds rate from its current zero to 0.25 per cent band.
