NZ dollar pares Fed gains after local GDP softer-than-expect

Reuters

"While we wouldn't want to overplay how weak the data was (amid signs of temporary weather distortions), they do nonetheless underscore the Reserve Bank's view that time is on its side, especially given the myriad of global uncertainties and recent moves higher in retail interest rates, which is a de facto tightening", said David Croy, senior rates strategist at ANZ Bank New Zealand.

LONDON, March 14 The dollar climbed on Tuesday ahead of an expected interest rate rise by the U.S. Federal Reserve, as political risks from Dutch and French elections to Britain's exit from the EU weighed on European currencies. While the Federal Reserve "is the first cab off the rank" markets will also be watching for the Bank of Japan, Bank of England, Swiss National Bank, local GDP data and Australian labour data and the Dutch elections.

United States inflation data overnight cemented rate hike expectations.

Oil prices rebounded after the International Energy Agency said in its latest monthly report that OPEC crude producing nations were complying with a landmark deal to curb a global supply glut. While a rate increase from the USA central bank was largely anticipated, whether policymakers would signal a more aggressive pace of monetary tightening remained less certain.

Oil futures extended gains after climbing for the first time in a week on Wednesday on data showing a surprise drawdown in United States crude inventories.

The kiwi dollar traded at 64.96 euro cents from 64.83 cents yesterday.

In late trading, the dollar index fell 0.4 percent to 100.37.


The S&P 500 Index jumped by the most in two weeks while contracts on Australian, Korean and Taiwanese stock indexes pointed higher.

USA long-dated and benchmark Treasury yields edged lower on Tuesday after a drop in oil prices was viewed as a deflationary sign, but the drop in yields was limited as investors awaited the Federal Reserve's policy statement on Wednesday. It touched its lowest level in 3 1/2 months early this week on concerns about a supply glut in the US, but data on Wednesday showing a small decline in stockpiles there helped lift prices. Although inflation is "close" to the Fed's 2-percent target, it noted that goal was "symmetric", indicating a possible willingness to allow prices to rise at a slightly faster pace.

Indexes: The German DAX 30 index was off 2 points at 11,987.84.

The 10-year yield was at 2.5402 percent, from its last close of 2.524.

USA crude climbed 0.2 percent to $48.84 a barrel, set to end the week 0.7 percent higher. Benchmark Brent settled up 1.8 percent to $51.81 a barrel. It is down nearly 11 percent since March 3.

"Lower rates, higher equities and a lower dollar all point to this being interpreted as more dovish than what was expected", said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

Seoul advanced 0.8 percent, Sydney ticked up 0.2 percent and Singapore was 0.8 percent higher, while there were also big gains in Wellington, Taipei, Jakarta and Manila.

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