The New Zealand dollar dropped today on a range of factors but commentators still think it will test US80c.
The NZ dollar was at US78.93c at 5pm, down from US79.17c at 8am and US79.27c on Friday. On Saturday morning it ran close to the 30-month high US79.75c level that was
reached early on Friday.
The corrective move lower today was expected by analysts, who said it was driven by profit-taking, while reports of a possible bacterial infestation in kiwifruit vines did not help sentiment, nor did a bigger than expected hole in government accounts.
BNZ said that news that the Ministry of Agriculture and Forestry (MAF) was investigating symptoms of Pseudomonas syringae pv actinidiae disease on kiwifruit vines on a North Island orchard was a negative factor on the day.
"We must stress that it is only an investigation at this stage, but one the authorities are taking seriously. It seemed to catch the market's attention, with the NZ dollar peeling back around one third of a cent against the US dollar in early trade," BNZ said.
The kiwifruit industry accounts for more than $1 billion, or 2.5 per cent, of New Zealand's total merchandise exports.
"It is too early to say what the impact will be. Final test results will not be known until Wednesday," BNZ said.
- REUTERS also reported that a buying spree in the NZ dollar market by hedge funds last week had paused for now.
New Zealand government accounts for the three months to September were also worse than expected and BNZ said this was due to the economy under-performing.
"Overall, the accounts suggest the road back to surpluses will be a long one. Indeed, something that the finance minister today described as `a significant medium-term challenge"'.
The US dollar soared in the overnight Friday session after data showed employers in the United States added 151,000 jobs in October, blowing past expectations of a 60,000 rise and marking the fastest pace of hiring since April.
The report came two days after the Federal Reserve committed to inject US$600 billion to boost the flagging US recovery and left some investors open to the possibility the greenback may have carved a bottom against the euro and yen, despite the prospect of more monetary easing.
ANZ also said the NZ dollar should also head back toward the A77c zone against the Australian dollar, having failed to break past resistance at A78.50c last week.
By 5pm the NZ dollar was at A77.99c from around A78.35c at 10am on Saturday and A78.04c at 5pm on Friday.
The NZ dollar was little changed at 64.10 yen at 5pm from 64.06 yen at 5pm on Friday and rose to 0.5660 euro from 0.5582 on Friday . The trade weighted index was 69.54 at 5pm from 69.35 on Friday.
Rankin Treasury said NZ dollar trading will be choppy this week, which is relatively light data-wise. Westpac expects the bias in the market this week to be positive.
"A correction this week should be limited to US77.50c, and the resuming rally should break US80c en route to US82c," Westpac said.
- NZPA
The New Zealand dollar dropped today on a range of factors but commentators still think it will test US80c.
The NZ dollar was at US78.93c at 5pm, down from US79.17c at 8am and US79.27c on Friday. On Saturday morning it ran close to the 30-month high US79.75c level that was
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