NZ dollar heads for weekly 2% decline vs greenback, gains vs Aussie
By Rebecca Howard
Oct. 27 (BusinessDesk) - The New Zealand is headed for a weekly decline of 2 percent against a resurgent greenback and gained versus the Aussie after a court ruling on the status of an MP who represents the Australian government's majority.
The kiwi was trading at 68.40 US cents versus 68.36 US cents as at 8:30am in Wellington and 68.88 cents late yesterday. It traded at 69.68 US cents last Friday in New York. It was at 89.58 Australian cents from 89.33 cents late yesterday.
Australia's constitution prohibits dual citizens from standing for office. Four other politicians were also invalidly elected last July, according to the ruling. Deputy prime minister Barnaby Joyce's invalid election means the government no longer has a one-seat majority. "It's been negative for the Australian dollar," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. Joyce, however, has renounced his kiwi citizenship and could run again in a by-election.
Outside of the Australian news the "kiwi has been heavy all day long, it hasn't bounced at all," said Kelleher. He said any further falls could open up significant downside. "If we can't hold 68 US cents, it looks pretty ugly," he said.
Looking ahead, he said markets will be watching for an announcement on the new chair of the US Federal Reserve, something that could happen this weekend. Earlier news reports indicated US President Donald Trump has narrowed his search for the new Fed chair to replace Janet Yellen to Fed Governor Jerome Powell and Stanford University economist John Taylor.
Taylor "would be more dollar bullish," said Kelleher.
The kiwi traded at 58.76 euro cents from 58.24 cents, benefiting from euro weakness after the European Central Bank said it would cut bond purchases as expected but otherwise kept its dovish tone. The trade-weighted index was at 72.80 from 72.88 yesterday and the kiwi traded at 4.5471 yuan from 4.5671 yuan. It traded at 52.06 British pence from 51.91 pence and 78.01 yen from 78.19 yen.
New Zealand's two-year swap rate was unchanged at 2.16 percent and 10-year swaps rose 2 basis point to 3.24 percent.