NZ dollar falls against pound on Brexit cheer

By Rebecca Howard

Aug. 23 (BusinessDesk) - The New Zealand dollar fell against the British pound after markets took German Chancellor Angela Merkel literally when she said a negotiated departure for Britain from the European Union might be possible in 30 days.

The kiwi was trading at 51.94 British pence at 8am in Wellington from 52.55 British pence at 5:05pm in Wellington. The trade-weighted index was at 70.93 points from 71.00.

We “might be able to find it in the next 30 days, why not?” Merkel told reporters, according to The Australian.

British Prime Minister Boris Johnson "took it as a Brexit solution being a literal 30 days away and by the looks of the pound, so did the market," said Kiwibank trader Mike Shirley.

However, Merkel later took the unusual step of clarifying her remarks, the Financial Times reported.

“It is not about 30 days,” she said. “The 30 days were meant as an example to highlight the fact that we need to achieve it in a short time because Britain had said they want to leave the European Union on October 31,” the FT quoted her as saying.

The main focus for markets continues to be a speech by US Federal Reserve chairman Jerome Powell at the central bankers’ gathering at Jackson Hole in Wyoming later in the global trading day. His remarks will be closely scrutinised for any clues about what the Fed might do next.

Overnight Philadelphia Fed President Patrick Harker said he doesn’t see the case for additional stimulus following the Federal Reserve’s July rate cut, while Kansas City Fed president Esther George said the July cut was not required, according to CNBC.

Meanwhile, US President Donald Trump continued to up his pressure on the Fed tweeting “The question is being asked, why are we paying much more in interest than Germany and certain other countries? “

ANZ Bank senior economist Miles Workman said NZ retail sales volumes today will provide the kiwi with some near-term direction, but the Jackson Hole symposium over the weekend remains the main focus.

The kiwi was trading at 63.65 US cents versus 63.70 cents late yesterday.

It was at 94.19 Australian cents from 94.25, at 4.5090 Chinese yuan from 4.5064, at 57.42 euro cents from 57.48 and at 67.72 yen from 67.80.

(BusinessDesk)

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