Late Change NZD/USD 0.8232 +0.0026 NZD/AUD 0.8002 -0.0039 NZD/JPY 62.835 -0.01 April 2013 Bond 2.99% +3.5 bps May 2021 Bond 4.42% +1.5 bps 10-Year U.S. Spread +247 bps unchanged 90-Day Bank Bill 2.82% unchanged WELLINGTON (Dow Jones)--The New Zealand dollar was higher against the U.S. dollar late Wednesday but has stuck to a narrow range as market participants await the outcome of a two-day Federal Reserve Open Market Committee meeting due later in the global trading day. "Not even the widening of our current account deficit could do anything (to the currency) outside of the initial 10-second drop that we had. It's pretty clear that the market is holding back and waiting," Western Union Business Solutions Corporate Dealing Manager Chris Hunter said. Data Wednesday morning from Statistics New Zealand showed the current account swung to a NZ$921 million deficit in the three months to June 30, from a revised surplus of NZ$90 million in the first quarter. The median forecast in a Dow Jones Newswires poll of 10 economists was for a deficit of NZ$691 million. Hunter said that any announcement from the Federal Reserve, "assuming they come out with some sort of acknowledgement and a hint of a plan, will increase stability in the market, which will also prompt investor confidence which could be quite positive for the Kiwi." He said, however, that the currency will face significant headwinds around the US$0.8400 area. BNZ FX Strategist Kymberly Martin said markets are broadly expecting the central bank to announce "Operation Twist," extending the duration of its bond holdings, in order to further lower long-term interest rates. Any failure to meet market expectations will weigh heavily on so-called risk currencies, such as the Kiwi. Domestic second-quarter gross domestic product data, due Thursday, will likely be overlooked given the global backdrop and as it is a lagging indicator, Hunter said. Traders also underscored that while investors' attention is focused on the FOMC, ongoing worries about Europe aren't far from the fore. Government bond prices ended slightly lower while swap rates pushed higher. A local bond trader said the New Zealand market was tracking moves in Australia but trading was light as most investors awaited comments from the Fed as well as any clarity about Europe. "Until that happens, our market isn't going to move much," he said. -By Rebecca Howard, Dow Jones Newswires; +64-4-471-5990; rebecca.howard@dowjones.com

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