NZ dollar pares losses; political jitters return across Tasman
By Rebecca Howard
Oct. 23 (BusinessDesk) - The New Zealand dollar pared some of its losses against the Australian dollar as political jitters across the Tasman weighed on sentiment.
The kiwi traded at 92.55 Australian dollars at 5pm in Wellington from 92.45 Australian cents at 8am and from 93.23 cents yesterday. It was at 65.40 US cents versus 65.92 cents yesterday, after opening sharply lower on the stronger US dollar.
While both the kiwi and the Aussie fell on concerns that China and the US were digging in for a long trade battle, the Aussie came under additional pressure after a by-election on Saturday. The country's ruling Liberal-National coalition looked to have lost its one-seat parliamentary majority and now faces the threat of snap elections, according to Dow Jones Newswires.
"The kiwi has moved higher on the back of more political instability across the Tasman," said Ross Weston, head of trading for Kiwibank. Otherwise "it has been a very quiet day," with the local currency continuing to ease against the strengthening greenback.
With little domestic data on the near-term horizon, Weston said he expects the kiwi to stick in a 65 to 66 US cents range. Investors will continue to keep a close eye on China, in particular after the People's Bank of China yesterday offered more support for private firms, including ways to help them tap capital markets for funding.
"There's not a whole lot of action or data to drive things so we will be looking offshore to the dollar and the Chinese economy for direction," he said.
The trade-weighted index was almost unchanged at 71.82 from 71.88 last week.
The kiwi fell to 50.44 British pence from 50.73 pence yesterday and dropped to 57.09 euro cents from 57.63 cents. It traded at 73.60 yen from 74.65 yen and at 4.5385 Chinese yuan from 4.5961 yuan yesterday.
New Zealand's two-year swap rate was unchanged at 2.02 percent; the 10-year swaps fell 1 basis point to 2.88 percent.