NZ dollar gains on Wall St. rally
By Paul McBeth
Dec. 8 – The New Zealand dollar rose after a late rally on Wall Street, prompted by President-elect Barack Obama’s announcement of the largest building programme in the U.S. since the 1950s.
Obama plans to create or retain 2.5 million jobs in the biggest American investment in roads, bridges and public buildings since President Dwight D. Eisenhower’s administration built the interstate highway system. The announcement came one day after a U.S. Labor Department report showed the biggest fall in American employment in 34 years. New Zealand Prime Minister John Key told TVNZ’s Agenda the kiwi dollar may fall below 50 U.S. cents as the economy slows. Quotable Value figures today showed house prices fell 6.8% for the year ending in November.
“When local data comes out and is real, people will believe” how bad the economic situation is,” said Imre Speizer, currency strategist for Westpac. He said his bank is advising its customers to sell the kiwi “on any strength.”
The kiwi rose to 53.40 U.S. cents from 53.23 cents on Friday, and jumped to 49.66 yen from 49.04 yen. It increased to 82.53 Australian cents from 82.28 cents, and gained to 41.95 euro cents from 41.18 cents.
Speizer said the dollar may trade between 52.50 U.S. cents and 54 cents today, and 52 cents and 55.50 cents for the week. He predicts it will break below its 52 cent barrier this year.
The New Zealand building data today will probably underscore the weakness of the local economy, said Danica Hampton, currency strategist at Bank of New Zealand. She predicts “another miserable reading from our PMI index” on Thursday, highlighting a drop-off in manufacturing.