NZ dollar heads for 1.2 percent fall for the week after greenback rallies
By Paul McBeth
Feb. 8 (BusinessDesk) - The New Zealand dollar is heading for a 1.2 percent fall against the greenback over the course
of the week after the US currency rallied following a warning from European Central Bank boss Mario Draghi against the
strength of the euro and weak local employment data.
The kiwi traded at 83.42 US cents at 5pm in Wellington from 83.05 cents this morning and 83.53 cents yesterday. The
currency climbed to 62.19 euro cents from 61.85 cents yesterday.
ECB President Draghi kept the region's benchmark interest rate on hold and said he's concerned about the strength of the
euro, sending the currency lower and supporting greenback strength.
That came a day after New Zealand government figures showed employment shrank at the end of last year and the headline
jobless rate fell to 6.9 percent because fewer people were looking for jobs. A BusinessDesk survey of analysts on Monday
had picked the currency to gain this week.
"The kiwi's in consolidation mode," said Tim Kelleher, head of institutional FX sales at ASB Institutional.
The currency will probably find buyers at 83.75 US cents, though "the risk is the market's quite long on the kiwi and we
might see it back to 82/82.50 US cents," he said, referring to the position where an investor holds an asset on the
expectation it will gain value.
Risk-sensitive assets including the Australian and New Zealand currencies were supported by upbeat Chinese trade
figures, showing exports and imports rose by more than expected last month. Chinese exports climbed 25 percent in
January from a year earlier, while imports advanced 29 percent.
The Reserve Bank of Australia cut its forecasts for economic growth and inflation today as investment outside its
resources sector remains cautious and the mining sector shows signs of slowing down. The kiwi rose to 81.08 Australian
cents from 80.98 cents yesterday.
"The kiwi/Aussie is looking quite strong. Interest differentials are widening in favour of the kiwi," Kelleher said. The
yield on New Zealand's 10-year government bond was 3.77 percent at 5pm in Wellington, 28 basis points above its
Australian counterpart.
New Zealand's currency was unchanged at 77.98 yen and fell to 53.06 British pence from 53.36 pence yesterday. The
trade-weighted index was little changed at 75.77 from 75.71 yesterday, and is almost unchanged on the week.
(BusinessDesk)