Kiwi edges lower as Sandy keeps markets ducking for cover
BUSINESSDESK: The New Zealand dollar edged lower as Hurricane Sandy hit New York City and left traders stranded on the sidelines, eroding bets on riskier, higher-yielding assets.
The kiwi crept up to 82.01 US cents at 5pm in Wellington from 81.88 cents this morning, and was down from 82.13 cents yesterday. The trade-weighted index was almost unchanged at 79.30 from 73.31 yesterday.
The North American storm shuttered the New York Stock Exchange as it lashed the main commerce hub in the US, leading to light trading volumes and diminished appetite for riskier assets.
The storm, downgraded from a hurricane, comes ahead of next week's US presidential election race between Democrat incumbent Barack Obama and his Republican rival Mitt Romney, which pundits are finding too close to call.
The election is seen as pivotal as the US federal government faces a so-called "fiscal cliff" in December when severe budget cuts are scheduled to come into effect.
"Markets are a little thinner than usual, but it's not like there's a big change in the global outlook," says Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "For most of the day the kiwi has traded in a 20 basis point range. It's pretty unexciting stuff."
Traders are waiting for the Bank of Japan to announce the result from its second policy meeting in a month, with 26 of 27 economists surveyed by Bloomberg predicting the central bank will expand its 55-trillion yen asset purchase programme. The kiwi rose to 65.95 yen from 65.47 yen yesterday.
The currency fell to 63.32 euro cents from 63.51 cents yesterday and edged up to 51.15 pence from 51.05 pence. It was little changed at 79.29 Australian cents from 79.22 cents.