RESEND: NZ dollar heads for 2.4% weekly fall on TWI

RESEND: NZ dollar heads for 2.4% weekly fall on TWI as trans-Tasman currencies fall from favour

(Fixes move against US dollar in 2nd graph)

By Paul McBeth

June 7 (BusinessDesk) - The New Zealand dollar is heading for a 2.4 percent weekly drop on a trade-weighted basis as the trans-Tasman currencies fall out of favour amid growing signs of a slow-down in Australia and speculation the US Federal Reserve will pull back on printing money.

The kiwi rose to 79.69 US cents at 5pm in Wellington from 79.53 cents at 8am and 79.09 cents yesterday. The trade-weighted index fell to 74.25 from 74.41 yesterday and 76.08 last week.

The Australian dollar fell as low as 94.65 US cents, trading at 94.99 cents at 5pm in Wellington as investors continue to back away from the South Pacific as they rethink their positions in global assets.

The prospect of the Fed winding back its US$85 billion a month asset purchase programme puts focus on the strength of US non-farm payrolls figures due on Friday in Washington, with chairman Ben Bernanke linking tighter monetary policy to an improvement in the country’s labour market. Employers probably added 170,000 jobs to their payrolls in May, according to a Reuters survey of economists.

“Global investors have decided to reassess their overweight views on the kiwi and Aussie dollars,” said Dan Bell, currency strategist at HiFX in Auckland. “The current mood does have the feeling of a more structural reallocation in global capital, and the kiwi and Aussie could continue to underperform for some time.”

The local currency is heading for a 0.4 percent weekly gain against the greenback from 79.34 US cents last Friday, in a period where it traded between 78.99 cents and 81.19 cents. A BusinessDesk survey on Monday of eight strategists predicted the local dollar might trade in a range of 79.36 cents to 83 cents this week, with a positive bias.

The New Zealand dollar dropped to 60.08 euro cents from 60.31 cents after European Central Bank policy makers kept their key rate at a record low. They downgraded their forecast for growth for this year, while upgrading expectations for 2014.

The kiwi fell to 51.07 British pence from 51.33 pence after the Bank of England kept its target for bond purchases at 375 billion pounds.

The local currency sank to 76.76 yen from 78.40 yen yesterday, and is heading for a 3.7 percent weekly slide. It gained to 83.87 Australian cents from 83.71 cents yesterday.

(BusinessDesk)

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