NZ dollar little changed as Ukraine tensions rattle investors
By Paul McBeth
Aug. 18 (BusinessDesk) - The New Zealand dollar was little changed as tensions between Russia and the Ukraine continue to rattle uncertain investors.
The kiwi traded at 84.88 US cents at 8am in Wellington from 84.82 cents on Friday in New York, and 84.88 cents at 5pm last week. The trade-weighted index was little changed at 79.58 from 79.62 last week.
Stocks on Wall Street fell and US Treasuries rallied on Friday as investors sought safe-haven assets after Ukraine announced it attacked an armoured Russian convoy. Ukraine's and Russia's foreign ministers are meeting in Germany to discuss the escalating conflict. Lower yield on US bonds and mixed economic data also sapped demand for the greenback.
The low yield on US Treasuries "is derailing the strength the market expects to see in the US dollar," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington. "For the kiwi to go lower, the US dollar has to strengthen."
OMF's Ive said New Zealand's currency may trade between 84 US cents and 85.30 cents, with headlines driving direction and a lack of local economic data. Tommorw sees the release of the government's pre-election fiscal and economic update, which will give the last view of the projected 2014/15 fiscal surplus before the Sept 20 election.
Traders will watch the BNZ-Business NZ performance of services index this morning.
Later in the,week, US, European and Chinese manufacturing figures will be watched.
The kiwi edged down to 86.83 yen at 8am in Wellington from 86.99 yen last week, and was little changed at 91.07 Australian cents from 90.99 cents. It decreased to 63.40 euro cents from 63.50 cents, and declined to 50.71 British pence from 50.84 pence.