NZ dollar weaker amid heightened Middle East tensions; US data looms
By Suze Metherell
June 25 (BusinessDesk) - The New Zealand dollar held at overnight lows in local trading after geopolitical tensions in the Middle East sapped demand for risk-sensitive assets, and ahead of US economic data.
The kiwi was almost unchanged at 86.80 US cents at 5pm in Wellington, from 86.82 cents at 8am, and down 87.19 cents yesterday. The trade-weighted index dropped to 80.82 from 81.08 at 5pm yesterday.
Stocks fell across Asia, following Wall Street's lead, as violence in Iraq escalated into cross-border hostilities with Syria, fuelling investors' fear about the stability of the Middle East. Meantime, traders are preparing for the third reading of US gross domestic product data, which is expected to show the world's biggest economy shrank in the first quarter, while durable goods orders for May is estimated to have fallen for a second month.
"There are still some geopolitical fears and we do see some risk coming off, we'll be looking to the stock markets tonight to see if we get a continuation in selling there," said Stuart Ive, senior dealer, foreign exchange at OMF. "If we do see that we could see some risk coming off as well which means the dollar could test lower levels."
OMF's Ive said the US GDP figure will be "viewed as historical data," and markets will be closely watching the durable goods report.
The New Zealand dollar rose to 92.68 Australian cents at 5pm from 92.50 cents yesterday. Reserve Bank of Australia deputy governor Philip Lowe spoke as part of a panel in Melbourne today on global challenges for G20 group of finance ministers and central bankers from the world's 20 biggest economies.
The kiwi fell to 63.76 euro cents from 64.14 yesterday, after the IFO German business confidence report fell to its lowest level this year.
The local currency edged down to 51.12 British pence from 51.22 pence yesterday, and dropped to 88.42 yen from 88.88 yen yesterday.