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NZ Dollar Slips Against Broadly Gaining Greenback

Fuseworks Media
Fuseworks Media

Wellington, Dec 22 NZPA - The New Zealand dollar slipped against the greenback which gained broadly as traders thought the US currency's slump earlier last week may have been overdone.

By 8am today the NZ dollar was buying US57.45c from US58.25c at 5pm on Friday. The kiwi gained on the euro, lifting to 0.4129 by today's local open from 0.4077.

BNZ currency strategist Danica Hampton said last week's exhausting price action was completed with the US dollar on the front foot as most major currencies, except the yen, lost ground on Friday.

The NZ dollar was caught in the wake of the market, and retreated to trade just above the US57c level at one stage, some 3c off last Thursday's extreme highs over the US60c level, she said.

The US dollar jumped against the euro, posting its biggest daily gain in almost two months.

Along with the view that the greenback's slump may have been overdone, the greenback also gained ground after the US government said it would provide loans to Detroit carmakers. The Bank of Japan's interest rate cut to nearly zero also lent support to the greenback.

"We've seen an extraordinary amount of volatility over the last few sessions and part of that is due to the fact that it's year-end and month-end for a lot of banks and institutions," said Steven Butler, director of foreign exchange trading at Scotia Capital in Toronto. "It really is about flows and positioning."

The NZ dollar eased down against its trans-Tasman counterpart to A84.10c at 8am today from A84.30c at 5pm on Friday.

The kiwi was also down to 51.25 yen at the local open from 51.95. The trade weighted index was 55.97 at 8am from 56.17 at 5pm Friday.

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