NZ dollar dips against US dollar after greenback recovers

NZ dollar dips against US dollar after greenback recovers some ground

By Rebecca Howard

July 28 (BusinessDesk) - The New Zealand dollar was weaker after the greenback clawed back some of its losses and was only headed toward a weekly gain of 0.2 percent despite touching a 26-month high yesterday.

The kiwi fell to 74.75 US cents at 5pm versus 75.88 US cents at 8am in Wellington, well off the 26-month high of 75.58 US cents it touched in Asian trading yesterday. The trade-weighted index declined to 78.83 from 79.21.

Tim Kelleher, ASB Bank head of institutional foreign exchange sales New Zealand, said the US dollar's tumble in Asian trading "triggered an FX option on the euro and ever since then we have seen the US dollar bounce. I don't know how big that structure was on the euro that got taken out, but it was obviously pretty big," he said.

He also noted Asian equity markets have pulled back on the day and the Dow Jones futures are "quite strongly negative." There "seems to be a bit of risk off today" which is weighing on the Kiwi, he said. He added, however, there is no specific news driving things and it may also be some month-end profit taking.

The US dollar was also helped by data overnight that showed US durable goods orders rose more than expected in June, stoking optimism the world's biggest economy didn't falter in the second quarter.

He said the kiwi would likely find support around 74.00 US cents to 74.25 US cents and that a dearth of data means that any moves will be market driven.

The kiwi rose to 93.81 Australian cents from 93.70 cents yesterday and traded at 63.93 euro cents from 64.22 cents. It fell to 82.98 yen from 83.77 yen, traded at 57.15 British pence from 57.40 pence and fell to 5.0432 yuan from 5.0759 yuan.

New Zealand's two-year swap rate rose 1 basis point to 2.21 percent while the 10-year swaps were unchanged at 3.27 percent.

(BusinessDesk)

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