Tuesday 08 November 2016 08:35 AM
NZ dollar edges higher as stocks rally in lead-up to US presidential election
By Paul McBeth
Nov. 8 (BusinessDesk) - The New Zealand dollar edged higher against the greenback as Hillary Clinton's lead in polling
ahead of the US presidential election bolstered investor sentiment in the tightly contested race.
The kiwi increased to 73.22 US cents from 73.15 cents yesterday, and the trade-weighted index gained to 78.57 from
78.48.
Clinton held a three-point lead over rival Republican candidate Donald Trump in the final Bloomberg Politics national
poll ahead of the Nov. 8 vote after the Federal Bureau of Investigation yesterday said it has no reason to pursue
criminal charges against the Democrat nominee. That boosted investor optimism, which has been spooked by the prospect of
a protectionist Trump presidency, with stock markets in Wall Street and Europe carrying on a rally that started in Asia
yesterday. The Chicago Board Options Exchange Volatility Index, or VIX, known as Wall Street's fear gauge, dropped from
a four-week high.
"The US goes to the polls tonight, with results expected to dribble out from early tomorrow afternoon (NZT)," Bank of
New Zealand market strategist Kymberly Martin said in a note. "A convincing Clinton win would likely see a further
rebound in risk appetite, and the NZD supported. Alternative outcomes (unclear result or Trump victory) would likely
result in the more pronounced market response. Risk appetite would be damaged and the NZD under pressure."
The outcome of the US election will be weighing on New Zealand's Reserve Bank which will make its final policy review of
the year on Thursday. Governor Graeme Wheeler is expected to cut the official cash rate a quarter-point to a new
record-low 1.75 percent, though strength in recent economic data releases has prompted bank economists to view that as
the end of the easing cycle. Further complicating the review was a revision by Statistics New Zealand yesterday to the
consumers price index, which indicated more inflation in the September quarter than previously reported.
RBNZ deputy governor Grant Spencer is also scheduled to deliver a speech to the Payments NZ conference today entitled
'Innovation with resilience - a central banker's perspective'.
The local currency fell to 94.90 Australian cents from 95.36 cents yesterday and gained to 76.46 yen from 76.26 yen. It
increased to 66.32 euro cents from 66.06 cents yesterday and advanced to 59.05 British pence from 58.73 pence. The kiwi
was little changed at 4.9572 Chinese yuan from 4.9570 yuan yesterday.
(BusinessDesk)
ends