Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ dollar follows sharemarkets lower amid recession fears

NZ dollar follows sharemarkets lower as fears of global recession linger

By Jason Krupp

Aug. 22 (BusinessDesk) - The New Zealand dollar fell against the U.S. dollar after global equity markets surrendered last week's gains amid heightened recession fears.

The New Zealand dollar fell to 81.65 U.S. cents from 82.18 on Friday in New York, and declined to 70.29 on the trade-weighted index of major trading partners' currencies from 70.79.

Stocks on Wall Street and in Europe closed the week in the red as fears the U.S. and European Union are increasingly likely to face another recession saw investors abandon their so-called risk positions in favour of safe-haven assets, such as government bonds. On Wall Street, the Standard & Poor's 500 Index fell 1.5% to 1,123.53, and Europe's Stoxx Index dropped 1.6% to 223.13.

The flight to safety lifted demand for gold and treasuries, with the hedge metal last trading at US$1,851.65 an ounce, down from a fresh historic high of US$1,877. The yield on U.S. 10 year Treasuries dipped briefly below 2%, its lowest level since 1954 according to the Wall Street Journal, before paring back to 2.06%. That came at the expense of the growth-linked assets such as the kiwi and Australian dollars.

"We saw what happened to equities on Friday and at the moment the (New Zealand) currency is just tracking equities," said Khoon Goh, head of market economics and strategy at ANZ. "Everything is based on what is happening globally and there are increasingly more recession fears especially in the U.S. and Europe. I don't think any of the major houses are calling a recession just yet but it's getting pretty damn close."

On the crosses, the New Zealand dollar recently traded at 78.61 Australian cents, down from 79.36 cents on Friday in New York, and fell to 62.61 Japanese yen from 62.79 yen previously. It dropped to 56.84 euro cents from 57.51 cents last week, and declined to 49.64 pence from 49.81 pence.

Fears over a sovereign debt crisis in Europe resurfaced after Germany strongly rejected mounting calls for a joint euro bond over the weekend, saying it would not agree to the measure until economic policy was more centrally aligned. That closed the door on hopes some investors were fostering for a quick fix to the sovereign debt crisis.

The Bank of Japan signaled it is considering easing monetary policy further to tackle the sharp increase in the yen, which has seen high demand for investors looking for a safe haven currency.

Goh said the kiwi may trade between a range of 80.90 U.S. cents and 82.20 cents with activity likely to tilt towards sideways trading with a slight downward bias.


© Scoop Media

Business Headlines | Sci-Tech Headlines


FIRST Union: Do Shareholders Realise Marsden Point Conversion Could Cost More Than Half A Billion Dollars?

FIRST Union, the union representing workers at Refining NZ, are querying whether shareholders voting on Friday on whether to convert the Marsden Point refinery to an import-only terminal realise the conversion could cost $650-700 million dollars... More>>

Civil Contractors: Massive Rebound In Civil Construction Business Confidence

New Zealand’s civil construction industry is riding a massive rebound in post-pandemic business confidence – but this may be undermined by skills shortages, which continue to be the industry’s number one challenge... More>>

Energy: Feeling Our Way Towards Hydrogen - Tina Schirr

Right now hydrogen is getting a lot of attention. Many countries are focusing on producing hydrogen for fuel, or procuring it, or planning for its future use... More>>

ASB: New Support Finder Tool Helps Connect Customers With Thousands In Government Support

ASB research alongside benefit numbers from the Ministry of Social Development shows an increased number of Kiwis are struggling financially, and many may not be aware they’re eligible for government support... More>>

Housing: New Home Consents Continue To Break Records

A record 44,299 new homes were consented in the year ended June 2021, Stats NZ said today. “The annual number of new homes consented rose again in the June 2021 year, the fourth consecutive month of rises,” construction statistics manager Michael Heslop said... More>>

Real Estate: June Home Transfers Remain High
There were 44,517 home transfers in the June 2021 quarter, the highest June quarter figure since 2016, Stats NZ said today. The number of home transfers was very similar to the March 2021 quarter and was up 18,252 from the June 2020 quarter... More>>