NZ dollar weakens after drop in business confidence
NZ dollar weakens from elevated levels after drop in business confidence
By Jonathan Underhill
June 30 (BusinessDesk) - The New Zealand dollar fell after a survey showed a decline in business confidence this month, giving traders more reason to sell a currency near a three-year high against the greenback and near a record on a trade-weighted basis.
The kiwi was at 87.53 US cents at 5pm in Wellington, down from 87.75 cents at 8am in Wellington, when it was little changed from the close in New York on Friday. The trade-weighted index fell to 81.24 from 81.52 on Friday.
Business confidence fell in June, according to the ANZ Business Outlook, which showed a net 43 percent of those surveyed see better general business conditions in the year ahead, down from 54 percent a year earlier, a decline attributed to a central bank raising interest rates, lower export prices for dairy and forestry, and a housing market showing signs of cooling. Prime Minister John Key said at his post-Cabinet media conference today that he expects the kiwi dollar to fall as commodity prices continue to weaken.
"Business confidence was the market mover - weaker data in a market which wants to sell the kiwi dollar at a very high level," said Imre Speizer, senior market strategist at Westpac Banking Corp. "The market is looking at risk reward - how much more can it go up, maybe half to one cent. It could fall further than that so on a relative probability basis there's going to be more bias to buying short than long."
Key data this week includes the Reserve Bank of Australia's interest rate review out tomorrow, which may include talking down the Australian dollar, which could drag the kiwi down with it, Speizer said. Traders are also looking ahead to US payrolls data on Thursday in the US.
Still, a BusinessDesk survey of 10 traders and strategists today showed on balance the kiwi could attempt to break through its recent highs, given weaker growth prospects in the US and the outlook for a strong local economy.
The New Zealand dollar was at 92.86 Australian cents, down from 93.15 cents at 8am and from 93.07 cents on Friday. It fell to 64.15 euro cents from 64.45 cents on Friday and traded at 51.40 British pence from 51.53 pence. It traded at 88.69 yen from 89.07 yen.