The NZD/USD has traded a 100 point range over the last 45 minutes after the Fed announced they will start to tapering their USD$85 bln per month bond purchase program by USD$10 bln.
Key points in their statement are:
- Tapering to begin in January
- Reducing bond purchases by USD$10 bln per month
- Fed cites cumulative progress towards full employment, improved jobs outlook
- Fed to keep rates unchanged "well past" time jobless rate drops below 6.5%
- Unemployment rate has declined; remains elevated
- Fed monitoring inflation developments carefully for evidence returning to target
- Keeps funds range unchanged at 0.0% to 0.25%.
- Voted 9-1 for Fed Funds rate action
- Fiscal drag on economy may be diminishing
- Risks to economy, labour market have become more balanced
- Longer-term inflation expectations have remained stable
The NZD was very volatile in immediate response - and Fed Chairman Ben Bernanke is currently giving a media briefing which is causing further volatility.
NZDUSD 0.8220 / 0.8250
NZDAUD 0.9260/ 0.9290
NZDEUR 0.5980 / 0.6000
NZDGBP 0.5015 / 0.5030
NZDJPY 85.30/ 85.40
From NZ today we get Q3 GDP at 10:45 with the market expecting a 1% outcome (3.2% annualised)
Email:
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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