NZ dollar falls to 2-month low as US data beats estimates

NZ dollar falls to two-month low as American data beats forecasts

By Paul McBeth

Dec. 16 (BusinessDesk) – The New Zealand dollar fell below 74 U.S. cents for the first time in two months as U.S. data beat expectations while Europe’s sovereign debt concerns kept investors’ appetite for risk on the backburner.

The kiwi dollar may be facing more losses as the world’s biggest economy showed signs of life with manufacturing data encouraging investors to seek so-called safe-haven assets amid a turnaround in America’s recovery. Risk sensitive assets took a hit as European sovereign debt concerns reared their head after Spain’s Aa1 credit rating with Moody’s Investors Service was put on a negative outlook.

“Not only did European debt jitters encourage ‘safe-haven demand’, but U.S. industrial production and manufacturing figures exceeded analyst expectations,” said Mike Jones, strategist at Bank of New Zealand. “Sliding NZ-US interest rate differentials suggest NZD/USD will struggle to sustain rallies above 0.7600 in the short-term.”

The kiwi dropped to 73.81 U.S. cents from 74.64 cents yesterday, and declined to 67.09 on the trade-weighted index of major trading partners’ currencies from 67.44. It fell to 62.39 yen from 62.55 yen yesterday, and slipped to 75.03 Australian cents from 75.23 cents. It decreased to 55.93 euro cents from 56.10 cents yesterday, and rose to 47.60 pence from 47.47 pence.

Imre Speizer, market strategist at Westpac Banking Corp., said the kiwi may fall as low as 70 U.S. cents over the coming months as the U.S. recovery starts to take hold.

The kiwi shrugged off a gain in milk prices, with the Fonterra Global Cooperative online auction reporting a 2.4% gain in trade-weighted dairy prices. Earlier this month Fonterra hiked its forecast pay-out to farmers by 30 cents to $6.90 per kilogram of milk solids due to strong global prices.

(BusinessDesk)

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