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NZ Dollar Bottoms At Multi-Week Lows Vs Major Currencies

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, July 9 NZPA - The New Zealand dollar troughed at multi-week lows against major currencies, but rose against its trans-Tasman counterpart as the yen soared broadly amid renewed concerns about the global economy.

The NZ dollar fell to a month low around US61.95c early today, from US62.85c at 5pm yesterday, then recovered partly to US62.59c by 8am.

It also reached a month low against the European currency, dropping from 0.4515 euro at the local close to bottom around 4.4475, before climbing to 0.4509 at the local open.

Against the Japanese currency, the kiwi fell to a seven-week low below 56.90 yen, from 59.27 at 5pm, climbing back to 58 yen at 8am. The trade weighted index was down to 59.46 at 8am from 59.68 at 5pm.

In contrast to the kiwi's weakness against the major currencies, it rose against the Australian dollar, getting to A80.53c at 8am, its highest level in more than a week, from A79.86c at 5pm.

In its morning brief, ANZ bank said the cancellation of a coal shipment to China ensured the Australian dollar was "crushed" overnight as markets took risk off the table.

In particular, the yen's strength meant significant sales of the Australian dollar, which was what enabled the kiwi to push back above A80c.

Risk aversion was back overnight sending stock markets lower, bond prices higher, commodities lower and boosting safe haven demand for the yen, ANZ said.

At the same time, a solid United States bond auction appeared to have limited falls on Wall Street.

BNZ Capital senior strategist Danica Hampton said that as risk aversion rose and equity markets continued to ease, currency markets were finally breaking to new levels.

The breach of previous support at the US62.50c to US62.75c level opened up the likelihood of the NZ dollar testing early June levels closer to US61.50c to US61.75c, which would provide some relief for beleaguered exporters, Ms Hampton said.

The lower NZ dollar against the yen also helped, but the kiwi risked firming further against the Australian dollar as developments in the mining sector were monitored.

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