NZ dollar falls to month low vs euro as Merkel forms coalition, Italian poll awaited
By Jonathan Underhill
March 5 (BusinessDesk) - The New Zealand dollar fell to its lowest level against the euro in about a month after German
Chancellor Angela Merkel announced a coalition between her conservative party and the Social Democrats, ending months of
talks, while the market awaits the outcome of Italy's elections
The kiwi traded at 58.67 euro cents as at 8am in Wellington and touched 58.53 cents this morning, the lowest since Feb.
8, from 58.66 cents in New York and 59.20 cents in Asia at the end of last week. The kiwi dollar traded at 72.39 US
cents from 72.34 cents in New York on Friday.
Merkel has been acting chancellor for more than five months after inconclusive elections and her ability to finally
forge a coalition was praised by French president Emmanuel Macron as "good news for Europe," Reuters reported. Exit
polls for Italy's general election are expected this morning New Zealand time and the populist Five Star Movement is
expected to record the biggest increase in support although not enough to form a government.
Merkel's coalition "comes with a cost of weakening her position but takes some uncertainty from the market," said Sharon
Zollner, chief economist at ANZ Bank New Zealand, in a note. "Italian election results are very unlikely to deliver an
obvious coalition recipe, but the market is most concerned about the small chance that the euro-sceptic Five Star party
could win and threaten the euro and Italian bonds."
The US dollar index is near its lowest levels in almost a week as financial markets digest the implications of US
President Donald Trump's announcement of tariffs on imported steel and aluminium. Trump has since fanned the flames with
a series of tweets, responding to comments from eurozone officials that they might consider tariffs on US products by
tweeting that European cars could be next.
"The USD is going to remain in the box seat in terms of drivers, but it is hard to think an escalation of trade disputes
is going to be positive for a trade-dependent economy like NZ in the long run," Zollner said.
Traders will be watching today for the ANZ commodity price index for an update on New Zealand's biggest exports.
The trade-weighted index was at 74.52 from 74.48 on Friday in the US.
The kiwi traded at 93.15 Australian cents from 93.08 cents at the end of last week and traded at 52.42 British pence
from 52.44 pence. It rose to 4.5916 yuan from 4.5865 yuan and was little changed at 76.48 yen.
(BusinessDesk)
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