NZ dollar falls as euro doubts linger

NZ dollar falls as euro doubts linger, Chinese manufacturing slows

By Paul McBeth

Feb. 22 (BusinessDesk) – The New Zealand dollar fell during the local trading session as the penning of a second bail-out package for Greece reignited uncertainty about Europe’s future, and a contraction in Chinese manufacturing dimmed investors’ appetite for higher yields.

The kiwi fell to 83.25 US cents at 5pm from 83.55 US cents at 8am, and was down from 83.74 cents. The trade-weighted index declined to 73.55 from 73.77.

Stocks in Asia were mixed after European share markets declined in the wake of the Greek deal, and Wall Street gained on better corporate earnings. Investors were left exhausted after volatile trading in the lead-up to the Greek deal, which offers the Mediterranean nation access to a 130 billion euro rescue fund and forgives debt owed to private bondholders.

“It seemed obvious there’s a whole lot more uncertainty in the market and there’s still some stuff they have to step through” before everything will settle, said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. “The kiwi has drifted off a little, but it’s still higher than where it was in late January and it looks pretty good.”

Tennent-Brown said with the Greek negotiations over, traders may turn their focus back to China and Australia when investing the trans-Tasman currencies, though there’s always a risk that another European nation will fall foul of its sovereign indebtedness.

Investor sentiment dimmed after weak Chinese manufacturing data that precedes official government figures. The HSBC Flash PMI showed manufacturing shrank in the world’s second-biggest economy last month, but includes Chinese New Year, which distorts the headline figure.

The kiwi fell to 62.94 euro cents from 63.17 cents yesterday and declined to 52.71 pence from 52.82 pence. It was little changed at 78.13 Australian cents from 78.18 cents yesterday, and fell to 66.53 yen from 66.72 yen.

(BusinessDesk)

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