By Paul McBeth
Oct. 24 (BusinessDesk) - The New Zealand dollar traded in a relatively tight range after Europe rejected Italy's plans to run budget deficits, stoking fears over the region's growth.
The kiwi traded at 65.56 US cents as at 8am in Wellington from 65.40 cents yesterday. It was little changed at 57.13 euro cents from 57.09 cents.
Stock markets in Europe dropped with Germany's DAX 30 index down 2.2 percent as the European Commission rejected Italy's plan to incur a budget deficit of 2.4 percent of gross domestic product in 2019. Italy has three weeks to come up with an alternative, although Prime Minister Giuseppe Conte has said he can't accept substantial change. The yield on Italian 10-year government bonds rose 2 basis points to 3.6 percent.
Wall Street was more muted, with the Dow Jones Industrial Average down 0.1 percent in late trading after several companies, including Caterpillar, 3M and Hasbro missed earnings expectations. Added geopolitical uncertainty has been reflected in financial markets, with the VIX, known as Wall Street's fear gauge, recently at 20.55 compared to a 20-year moving average of 13.31.
"Kiwi is sitting a touch higher, even with markets in risk-off mode and commodity prices lower, with this cross finding some stability after recent USD strength," ANZ Bank New Zealand economists Liz Kendall and Miles Workman said in a note. "More USD strength is possible, and we see this cross lower in time, but price action is likely to be choppy."
No local data is scheduled for today.
The kiwi traded at 92.51 Australian cents from 92.55 dollars yesterday and increased to 4.5474 Chinese yuan from 4.5385 yuan. It was little changed at 50.47 British pence from 50.44 pence yesterday and edged up to 73.70 yen from 73.60 yen. The trade-weighted index was at 71.90 from 71.82 yesterday.