US dollar steady, New Zealand currency hits 5-month low

LONDON/NEW YORK: The dollar was little changed yesterday against a basket of currencies on speculation about possible fresh leadership at the US Federal Reserve and bets that a tax cut package is on track to be enacted. The New Zealand dollar was the biggest mover among G10 currencies, declining to a fivemonth low after the incoming Labor-led coalition government said it plans to review and reform the Central Bank Act to include employment, alongside inflation, as a dual target. “What’s dominating the

narrative is the Fed chair position.

You overlay that with some momentum on tax reform. That puts the dollar on decent footing,” said Mazen Issa, senior FX strategist at TD Securities in New York. At 10:15 a.m. (1415 GMT), the index that tracks the dollar against a group of six currencies, was at 93.829, down 0.1 percent from Monday when it reached a 2-1/2-week peak of 94.017.

US President Donald Trump told reporters on Monday he is “very, very close” to deciding who should lead the Federal Reserve after interviewing five candidates for the position. His possible nominees include current Fed Chair Janet Yellen, whose term expires in February, as well as Fed Governor Jerome Powell, Stanford University economist John Taylor, Trump’s chief economic advisor Gary Cohn, and former Fed Governor Kevin Warsh. Hopes that Congress will pass a package of tax cuts have helped to strengthen the dollar and pushed US stocks to record highs, although skepticism has persisted in the absence of details on the overhaul and perceived discord between Trump and top Republican lawmakers. The greenback hovered near a three-month high versus the yen yesterday, gaining 0.3 percent at 113.79 yen. It held below a three-month peak of 114.09 yen in reaction to Japanese Prime Minister Shinzo Abe’s ruling Liberal Democratic Party-led coalition election win on Sunday. Abe’s victory reduced anxiety that the economic steps implemented under his leadership, including an expansive asset-purchase program by the Bank of Japan, would be disrupted.

The euro increased 0.2 percent to $1.1767 and rose 0.5 percent to 133.91 yen in advance of the European Central Bank’s policy meeting on tomorrow. Traders have expected the ECB to signal a gradual removal of monetary stimulus as eurozone economic growth has improved. The New Zealand dollar has lost nearly 5 percent on worries that a harder stance on immigration and foreign investment under its new government would hamper economic growth. It shed 0.75 percent to $0.6913 after hitting its lowest level since May 19.—Reuters