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NZ dollar heads for 0.8% weekly fall on risk aversion

NZ dollar heads for 0.8% weekly fall as Iraq, Ukraine sap risk appetite

By Paul McBeth

Aug. 8 (BusinessDesk) - The New Zealand dollar is heading for a 0.8 percent weekly decline as heightened geo-political tensions in Iraq and the Ukraine sap investors' appetite for risk-sensitive assets.

The kiwi fell to 84.45 US cents at 5pm in Wellington from 85.16 cents on Friday in New York last week. It traded at 84.84 cents at 8am and 84.56 cents yesterday. The trade-weighted index declined to 79.26 from 79.39 yesterday, and is heading for a 0.5 percent weekly fall from 79.67.

A BusinessDesk survey of eight traders and strategists on Monday predicted the kiwi would probably trade between 84 US cents and 86.05 cents this week. Four picked the kiwi to remain largely unchanged this week, and four expected it to gain.

Demand for the local currency was sapped after dairy prices fell to a two-year low, and the kiwi has remained under pressure with escalating geo-political tensions. US President Barack Obama today approved airstrikes against militants in Iraq if they threatened US personnel, while a build-up of Russian troops on the Ukraine border already had investors nervous.

"The kiwi's falling on the back of risk aversion returning, not just dairy prices," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "It's just a matter of time before the 84 US cents level breaks down."

Chinese trade figures beat expectations today, with a record trade surplus of US$47.3 billion in the year ended July 31 on a 15 percent increase in exports. Traders will be keeping tabs on Chinese inflation figures over the weekend.

The kiwi dropped to 85.93 yen at 5pm in Wellington from 86.47 yen yesterday after the Bank of Japan retained its record stimulus measures to boost the monetary base at an annual pace of 60 trillion yen to 70 trillion yen.

The local currency traded at 91.34 Australian cents at 5pm in Wellington from 91.26 cents yesterday after the Reserve Bank of Australia lowered its growth and inflation forecasts, a day after government figures showed the highest unemployment rate in 12 years

The kiwi traded at 63.22 euro cents from 63.19 cents yesterday, and was little changed at 50.23 British pence from 50.18 pence.


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