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NZ dollar near 2 1/2-yr low vs pound

Published: Tue 11 Sep 2018 08:32 PM
NZ dollar near 2 1/2-yr low vs pound on hope for early Brexit deal
By Paul McBeth
Sept. 11 (BusinessDesk) - The New Zealand dollar held near a two-and-a-half-year low on optimism the UK and European Union will reach an amicable split as early as November.
The kiwi traded at 50.06 British pence at 5pm in Wellington, having fallen as low as 50 pence, from 50.47 pence yesterday. The local currency was little changed at 65.26 US cents from 65.17 cents yesterday.
The pound rallied on news overnight that EU chief negotiator Michel Barnier said a Brexit deal could be wrapped up as early as November. The UK and EU have been making positive steps to overcoming their differences in recent weeks following several high profile resignations in the British ministry earlier this year over Prime Minister Theresa May's preferred Chequers deal.
"The kiwi/Sterling fell to its lowest since June 2016 because we had Barnier saying 'we can do a deal within eight weeks'," said Imre Speizer, Westpac Banking Corp's head of NZ strategy. "It's not quite to where we were before the Brexit vote, but it's getting towards it."
Local data today showed New Zealand spending on electronic cards rose 1 percent last month due to a big increase in spending on fuel. Speizer said he was surprised that didn't lift the kiwi, but added that many investors are waiting for next week's second-quarter gross domestic product report.
"If we get a strong GDP number that will send the shorts screaming for the exit door," he said, referring to investors who might be betting on the kiwi depreciating further.
The kiwi traded at 91.62 Australian cents from 91.64 cents yesterday after the NAB business confidence survey showed the sentiment of firms across the Tasman at a two-year low. The kiwi rose to 4.4795 Chinese yuan from 4.4702 yuan yesterday and gained to 72.71 yen from 72.31 yen. It fell to 56.25 euro cents from 56.44 cents. The trade-weighted index was at 71.13 from 71.10.
New Zealand's two-year swap rate was unchanged at 1.96 percent while 10-year swaps decreased 1 basis point to 2.8 percent.
(BusinessDesk)
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