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NZ dollar rises after Fed decision, bonds softer

Published: 04 Nov 2009 17:32:09 PST

WELLINGTON, Nov 5 - The New Zealand dollar <NZD=> strengthened on Thursday after the Federal Reserve left interest rates unchanged, as expected, and said it intends to keep rates low for an extended period.

* Kiwi around $0.7289/94, compared with $0.7191/97 in late local trade on Wednesday. Trading was choppy initially after the Fed's rate decision as U.S. equities pared gains.

* Kiwi support returns as Wall Street resumed its climb back toward session highs. It hit an offshore high of $0.7312.

* U.S. dollar falls in choppy trading against the euro after the rate move. Low rates should ensure that the U.S. dollar will remain a funding currency in deals in which investors borrow in dollars to buy higher-yielding assets.

* NZ dollar has enjoyed steady support after Fonterra, NZ's top export earner, posted a 13.7 percent rise in dairy prices at its latest auction on Wednesday, fuelling speculation of a higher payout to NZ farmers. [ID:nWEL459929]

* The European Central Bank and the Bank of England also hold policy meetings later in the week. [ECB/INT] [BOE/INT]

* Kiwi firmer against the euro <NZDEUR=R> and the yen <NZDJPY=R>, while remains soft against the Aussie <NZDAUD=R>, keeping the trade-weighted index <=NZD> 0.7 percent higher.

* Focus on third-quarter jobs data on Thursday with expectations unemployment will rise to 6.4 percent from 6 percent. [NZ/POLL] The Reserve Bank of NZ governor also speaking at the Trans Tasman business Circle.

* Kiwi seen trading in wide ranges, with support near term seen at $0.7150 and resistance at $0.7360.

* Swaps higher, while NZ bonds a tad softer, after long-dated U.S. Treasury debt prices fell on the Fed move. -------------(05 November 2009 09:01 / 2001 GMT)-------------

(Last prices as at 6pm NZ time the previous day) 90-DAY LIVE 2.81 (2.80) NOV-2011 4.280 (4.270) 90-DAY (DEC) 97.13 (97.14) APR-2013 5.037 (5.065) 90-DAY (MAR) 96.86 (96.89) DEC-2017 5.700 (5.695) 90-DAY (JUN) 96.09 (96.11) MAY-2021 6.000 (5.995) RBNZ MCI 262 (225) US 10YR BOND 3.539 (3.418) NZD TWI 65.41 (64.95) AU 10YR BOND 5.610 (5.527) NZD/USD 0.7289(0.7208) NZ/US 10YR SPD +216bp(+228bp) NZD/AUD 0.7982(0.7992) NZ/AU 10YR SPD +9bp (+17bp) NZD/EUR 0.4898(0.4876) NZ 2YR SWAP 4.470 (4.470) NZD/JPY 66.23 (65.00) NZ 5YR SWAP 5.620 (5.620) --------------------------------------------------------------- - (