NZ dollar edges higher as greenback remains unloved

NZ dollar edges higher as greenback remains unloved, commodity prices rise

By Paul McBeth

Dec. 29 (BusinessDesk) - The New Zealand dollar edged higher as the greenback remained out of favour in holiday trading, reinforcing demand for risk-sensitive assets such as commodities and currencies linked with raw materials.

The kiwi traded at 70.82 US cents as at 8am in Wellington from 70.75 cents yesterday. The trade-weighted index was at 74.02 from 74.07 yesterday.

The US Dollar Index slipped 0.5 percent as the greenback continued to underperform in the final stretch of 2017, stoking demand for risk-sensitive assets such as the euro and pushing up commodity prices including oil, gold and copper. That underpinned support for commodity-linked currencies such as the kiwi dollar, which is trading near a two-month high during the Christmas and New Year holiday period.

"The euro has been the big gainer and commodity prices have benefited from the weak US dollar," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington. "We've seen gold, oil and copper all rise and that's dragged the kiwi along with it."

Ive said the local currency didn't break resistance levels overnight, rising as high as 70.98 US cents, and that it will stay in a holding pattern heading into the year-end, when institutional investors typically reassess their portfolio weightings.

Concerns about the impact of US tax reform may also be weighing on the greenback, although Ive said investors won't get a clear idea of its influence until 2018.

The local currency slipped to 59.24 euro cents from 59.39 cents yesterday after Italy set the path for a general election, expected to be in early March. The eurozone's third-biggest economy may face a hung parliament in the poll with growing support for the Five Star Movement, which wants a referendum on leaving the European Union.

The kiwi traded at 52.66 British pence from 52.72 pence yesterday and decreased to 79.92 yen from 80.05 yen. It was little changed at 90.85 Australian cents from 90.89 cents yesterday and declined to 4.6261 Chinese yuan from 4.6289 yuan .

(BusinessDesk)

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