NZ dollar fall as investors shun commodity currencies

NZ dollar fall as investors shun commodity currencies on China concerns weigh

By Tina Morrison

May 10 (BusinessDesk) - The New Zealand dollar weakened along with other currencies linked to commodities on concern about Chinese demand, as the US dollar picked up.

The kiwi dropped to 67.65 US cents at 8am in Wellington, from 68.43 cents at 5pm yesterday. The trade-weighted index declined to 72.34 from 72.79 yesterday, while the US dollar index advanced to 94.157 from 93.815.

Investors shunned currencies of commodity producing countries such as Australia and New Zealand as their appetite waned for higher risk assets linked to global growth. The CRB Index, which measures a basket of 19 global commodities, touched its lowest level in more than two weeks after Chinese trade data at the weekend showed exports and imports in the world's second-largest economy fell more than expected in April, stoking concern about weak domestic and international demand.

"Across the board, commodity weakness and dollar strength prevailed," Stuart Ive, OMF senior dealer, foreign exchange, said in a note. "The New Zealand dollar joined and led the commodity currency rout."

OMF's Ive said expectations that New Zealand's Reserve Bank will follow Australia and cut interest rates further is also weighing on the kiwi.

He said the local currency has support around 67.15 to 67.50 US cents and faces resistance at 68.10 to 68.50 cents.

In New Zealand today, the government's financial statements for the nine months through March are released, along with April electronic card spending and the latest monthly ANZ inflation gauge.

Traders will be eyeing Chinese inflation and produce prices data for April as they assess the outlook for demand in New Zealand's largest export destination.

The New Zealand dollar slipped to 92.52 Australian cents from 92.69 cents yesterday, fell to 59.43 euro cents from 59.96 cents, dropped to 46.95 British pence from 47.38 pence, sank to 4.4067 yuan from 4.4486 yuan, and edged lower to 73.32 yen from 73.48 yen.

(BusinessDesk)

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