NZ dollar falls as fears over global growth push equities, commodities lower
By Paul McBeth
Nov. 21 (BusinessDesk) - The New Zealand dollar fell with other risk-sensitive assets as lingering US-China trade tensions keep investors nervous about the pace of global growth.
The kiwi declined to 67.99 US cents as at 8am in Wellington from 68.51 cents yesterday. The trade-weighted index fell to 74.34 from 74.65.
Stocks on Wall Street extended their decline, with the Dow Jones Industrial Average recently down 2.1 percent, in a holiday-shortened week. Tensions between the US and China were revived at the Apec leaders' meeting over the weekend, raising fears about the impact cooling global trade will have on company earnings.
Meanwhile, Brent crude oil prices dropped 6.5 percent to US$62.44 a barrel on concern there may be too much supply.
Dairy prices unexpectedly fell at the GlobalDairyTrade auction with the GDT index down 3.5 percent. Whole milk powder prices fell a more modest 1.8 percent to US$2,599 a tonne. Data yesterday showed New Zealand October milk production was a record due to strong pasture growth.
"A broad-based deterioration in risk sentiment overnight was always going to mean the NZD struggled, and further weakness in global dairy prices compounded its woes," ANZ Bank New Zealand economists Miles Workman and Philip Borkin said in a note. "Liquidity will no doubt lighten up into the second half of the week but for now the kiwi is likely to remain on the defensive."
Local data today include October credit card spending and balances.
The kiwi traded at 94.12 Australian cents from 94.03 cents yesterday and fell to 4.7234 Chinese yuan from 4.7564 yuan. It dropped to 76.60 yen from 77.10 yen and traded at 53.21 British pence from 53.27 pence. The kiwi was almost unchanged at 59.82 euro cents from 59.80 cents.