Kiwi dollar holds near decade-low against Aussie

Kiwi dollar holds near decade-low against Aussie

by Paul McBeth

Dec. 10 (BusinessDesk) – The New Zealand dollar held near a decade-low against its Australian counterpart as the so-called ‘lucky country’ created more jobs than expected last month, while the Reserve Bank of New Zealand gave a more pessimistic view on the local recovery.

The kiwi fell against the Aussie after a further 54,600 Australian jobs were added last month, more than twice the 20,000 expected.

That came after the New Zealand central bank Governor Alan Bollard held the official cash rate at 3% and cut its track of future rate hikes due to the stall in the economic recovery.

That has analysts picking a later resumption of tighter monetary policy, with a mid-year hike looking more likely.

The kiwi/Australian dollar cross “is back near its lows after the very strong jobs data,” said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional.

“All of the crosses were weaker” after Bollard’s statement, and the “track is a lot lower than what it was.”

The kiwi was at 75.97 Australian cents from 75.82 cents yesterday, and fell to 74.64 U.S. cents from 74.83 cents. It was little changed at 67.56 on the trade-weighted index of major trading partners’ currencies from 67.55 yesterday, and fell to 62.46 yen from 62.73 yen.

It rose to 56.44 euro cents from 56.26 cents yesterday, and gained to 47.42 pence from 47.25 pence.

Kelleher said the currency may trade between 74.25 U.S. cents and 75 cents today with investors likely to stay fairly pessimistic about so-called risk sensitive assets after American and Chinese stock markets fell.

Fitch Ratings downgraded Ireland’s three notches to BBB+, sapping investor confidence over Europe’s ability to deal with the sovereign debt crisis and putting the euro under pressure.

Democrat party opposition to U.S. President Barack Obama’s deal to extend the previous administration’s tax cut package added to the overall tone, with investors remaining downbeat.

The Bank of England kept its benchmark interest rate at 0.5%, and retained its quantitative easing programme at 200 billion pounds.

(BusinessDesk) 09:25:47

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