The New Zealand dollar fell against the greenback as growing confidence among Australian firms stoked demand for the Australian dollar.
The kiwi dropped to a two-month low 84.12 US cents, trading at 84.13 cents at 5pm in Wellington from 84.61 cents at 8am and 84.67 cents yesterday. It declined to 90.82 Australian cents from 91.21 cents yesterday.
National Australia Bank’s survey of business conditions rose 6 points to +8 in July, its highest level since early 2010, while confidence rose 3 points to +11. The upbeat survey fuelled demand for the Australian dollar at the kiwi’s expense, which has been favoured among investors because of its relatively high yield. Data showing rising house prices across the Tasman added to demand for the Australian dollar.
“Australia’s has a string of bad data, and some people are pricing in an RBA (Reserve Bank of Australia) rate cut – this stuff pulls them back to their senses,” said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. “Those two things gave the Aussie a real boost against the US dollar and against the kiwi – as a result, the kiwi/US has fallen.”
Westpac’s Speizer said the currency has broken through a key 84.50 US cents level, and if it falls below 84 cents in the London and New York sessions it could have a much bigger decline.
Real Estate Institute of New Zealand figures today showed house sales fell in July as winter set in, and Reserve Bank-imposed curbs on low equity home lending limit sales at the bottom end of the market.
The local currency fell 62.92 euro cents from 63.17 cents yesterday ahead of a ZEW reports on German and European economic sentiment tonight.
The kiwi declined to 50.20 British pence from 50.44 pence ahead of tomorrow’s releases of July employment data and the Bank of England’s quarterly inflation report.
The New Zealand dollar dropped 86.07 yen from 86.46 yen yesterday. The trade-weighted index fell to 78.99 from 79.39 yesterday.