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NZ Dollar Fall Continues In Wake Of Reserve Bank Comments

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 8 NZPA - The New Zealand dollar fell overnight as the market continued to react to yesterday's Reserve Bank report that pointed to risks to the economy and currency.

At the same time, the greenback was gaining as comments from a Federal Reserve official increased expectations that the US central bank's cycle of aggressive interest rate cuts may be nearing an end.

By 8am today the NZ dollar was buying US78.19c, having fallen from a two-week high of US79.35c early yesterday.

In its Morning Brief today, the ANZ bank said the NZ dollar had fallen from recent highs overnight, despite the pending home sales index in the US hitting a new low, as the market took stock of the Reserve Bank's comments on downside risks to the New Zealand economy.

Against the euro, the kiwi was at 0.5074 by today's local open from 0.5092 at 5pm yesterday. It was also buying 81.92 yen from 82.72 at yesterday's local close.

The cross with the Australian dollar saw the kiwi slip to A82.97c at 8am from A83.26c, while the trade weighted index fell to 70.13 from 70.59.

Among factors having an impact on currency markets were comments from Kansas City Fed president Thomas Hoenig that US interest rates will need to be raised in a timely way as the central bank grapples with a serious threat of inflation.

The euro also fell on reports showing euro area retail sales were much weaker than expected, down in monthly as well as annual terms, while German manufacturing orders unexpectedly fell by 0.6 percent in March -- underlining concerns about the slowing economy.

In this country, ANZ said the emphasis today was all about the workforce, with labour data from both here and across the Tasman likely to highlight the risk profile of the NZ dollar's cross with the aussie.

NZPA WGT Reuters mjd nb

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