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NZ Dollar Falls Against Greenback

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Dec 16 NZPA - The New Zealand dollar fell against a broadly stronger greenback, with strength in the United States currency mainly driven by a sharply weaker euro.

Also overnight, United States inflation data suggested the Federal Reserve could raise interest rates sooner than anticipated.

Data showed US producer prices rose 1.8 percent last month, the largest gain in three months. That pushed up US bond yields and came on the heels of stronger US employment and consumer spending data.

The inflation figures sent the greenback higher against the yen.

The NZ dollar dipped under US72c early today for the first time in nearly a week, falling from US72.64c at 5pm yesterday to be at US72.06c at 8am today.

The kiwi rose to 64.72 yen at the local open from 64.49 at 5pm, was little changed at 0.4962 euro at the local open and edged up to A79.63c against the Australian dollar. The trade weighted index dropped to 65.16 at 8am from 65.29 at 5pm.

BNZ Capital strategist Mike Jones said generally weaker global equity markets overnight combined with the broadly stronger greenback to erase the kiwi's gains against the United States currency from early this week.

Last night's gains in the US dollar were really about weakness in the euro, with fears about slow growth in the eurozone. Simmering fears about contagion effects from fiscal difficulties in Greece and rumours, later denied, that a large Austrian bank could be nationalised also weighed heavily on the euro.

Against the aussie, the NZ dollar continued on its path higher that followed the Reserve Bank of New Zealand's monetary policy statement last Thursday, Mr Jones said.

Minutes from the Reserve Bank of Australia's December board meeting, released yesterday, were not quite as hawkish as the market was looking for. As a result, markets had pared back the chances of a February rate hike across the Tasman, and that weighed on the Australian dollar.

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