Kiwi falls as markets await Euro deal

Photo / Dean Purcell
Photo / Dean Purcell

The New Zealand dollar fell against the greenback, following equity markets lower as lack of news out of Europe sapped some of the some of the optimism seen earlier this week when investors thought policymakers would expand the European bailout fund.

The kiwi dollar recently traded at 77.83 US cents, down from 78.45 cents yesterday, and fell to 69.06 on the trade-weighted index of major trading partners' currencies from 69.52 previously.

The lack of further concrete steps on expanding the scope of the European Financial Stability Fund by allowing it to borrow from the European Central bank, a key step in the eyes of many investors, saw global share markets unable to sustain yesterday's rally.

On Wall Street, the Standard & Poor's 500 Index fell 0.6 per cent to 1,167.80, and Europe's Stoxx 600 Index fell 1.1 per cent to 227.39.

Risk appetite were further dented as inspectors from the ECB and International Monetary Fund arrive in Greece to assess where policymakers had passed sufficient austerity measures to secure the release of the next 8 billion euro bailout payment needed to pay creditors and keep the government running through October.

"We saw a big rally in risk currencies in the previous session, and we've now given back half of that," said Khoon Goh, head of market economics and strategy at ANZ New Zealand. "We're in the phase now where the market is waiting for concrete news and in the interim there is a void and a lot of price action is noise to be fair."

On the crosses, the kiwi recently traded at 79.32 Australian cents, down from 79.38 cents yesterday, and fell to 59.49 Japanese yen from 60.01 yen previously. It dropped to 57.34 euro cents from 57.79 cents yesterday, and declined to 49.87 pence from 50.16 pence previously.

Data out of the US came in better than expected, with new orders for long-lasting US manufacture red goods falling by less than anticipated in August, while a rebound in a gauge of business spending supported views the economy would likely avoid another recession.

The kiwi may trade between a range of 77.20 US cents and 78.50 cents, Goh said, and is likely to trade in a volatile range ahead of more details on Europe.


- BusinessDesk

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