NZ dollar ekes out gain vs. Australian counterpart as pessimism grows across the Tasman
By Paul McBeth
Aug. 29 (BusinessDesk) - The New Zealand dollar inched up against its Australian counterpart as pessimism grows about the strength of Australia’s economy after tepid house sales yesterday and rising fears the resources boom may come to an end.
The kiwi traded at 77.55 Australian cents at 5pm in Wellington from 77.49 cents at 8am and down from 77.92 cents yesterday. It was little changed at 80.46 US cents from 80.45 cents at 8am and 80.71 cents yesterday.
The Australian dollar fell 0.2 percent to US$1.0367 as investors wound down their holds in the currency after weak house sales last month sparked fears the good times may be at an end for the so-called 'Lucky Country'. Deutsche Bank is warning Australia is in danger of a recession as demand for its resources wanes amid slowdowns in developing Asian nations, though that's at odds with annual growth indications exceeding 3 percent for the next two years, according to Bloomberg surveys.
"Bearish Aussie commentary is continuing to swamp the wires," said Mike Jones, currency strategist at Bank of New Zealand. "The kiwi has eked out modest gains versus the Aussie dollar today," he said, referring to the trans-Tasman currencies colloquially.
New Zealand's currency sank yesterday after Fonterra Cooperative Group trimmed its forecast payout to farmers by 30 cents, blaming falling commodity prices and a strong kiwi dollar for the cut. It expects a pick-up in global dairy prices but can't predict the strength of that recovery.
Traders are waiting for the central bankers' summit at Jackson Hole, Wyoming that kicks off on Friday, when Federal Reserve chairman Ben Bernanke makes his keynote address. Bernanke will hold centre stage after European Central Bank President Mario Draghi backed out of the trip, where he was scheduled to deliver a speech on Saturday.
The New Zealand dollar fell to 64.06 euro cents from 64.66 cents yesterday and dropped to 50.87 British pence from 51.11 pence. The trade weighted index decreased to 72.27 from 72.64, and the kiwi declined to 63.19 yen from 63.37 yen.