NZ dollar holds above 83 US cts as fiscal cliff euphoria abates
By Paul McBeth
Jan. 3 (BusinessDesk) - The New Zealand dollar held above 83 US cents in local trading today after global market euphoria abated on US politicians averting the US$600 billion fiscal cliff during the New Year holiday.
The kiwi rose to 83.21 US cents at 5pm in Wellington from 83.02 cents at 8am, and was down from 83.73 cents yesterday in Asia. The trade-weighted index decreased to 74.75 from 74.96.
Markets around the world rallied yesterday after US politicians reached a budget agreement of sorts to prevent automatic spending cuts and tax increases which would push the world's biggest economy back into recession.
That optimism has been tempered as investors now prepare for politicians to figure out where the spending cuts will come, and how they will address another looming debt ceiling. The US had its triple-A credit rating cut by Standard & Poor's in 2011 over politicians' inability to make meaningful progress on the debt ceiling.
"We're now on the ledge waiting for the next cliff the politicians have made for themselves," said Mike Jones, currency strategist at Bank of New Zealand in Wellington. "The good news is priced in and the risk is now for the kiwi to dribble lower."
New Zealand's currency gained in local trading after dairy prices rose 2 percent at the latest GlobalDairyTrade auction. The average winning trade-weighted price increased to US$3,357 per metric tonne from US$3,311/tonne at the Dec. 19 sale.
The kiwi fell to 72.57 yen at 5pm in Wellington from 73.05 yen yesterday, and declined to 79.37 Australian cents from 79.87 cents. It advanced to 63.31 euro cents from 63.02 cents yesterday and was little changed at 51.28 British pence from 51.37 pence.