Kiwi falls as US Speaker dashes optimism over fiscal cliff

The New Zealand dollar has fallen after US House of Representatives Speaker and senior Republican John Boehner dashes optimism politicians are getting closer to avoiding the fiscal cliff.

The kiwi fell to 82.24 US cents at 8am in Wellington from 82.41 cents yesterday. The trade-weighted index declined to 73.58 from 73.74 yesterday.

Investors eschewed risk-sensitive currencies such as the kiwi and Australian dollars after Mr Boehner said US President Barack Obama has to get "serious" about spending cuts and that "there is a real danger of going off the fiscal cliff".

He made the comments after speaking with Mr Obama and Treasury Secretary Timothy Geithner over ways to avert the automatic $US607 billion in tax increases and spending cuts which kick in on January 1.

"Investors were checking their optimism following the Boehner comments," says Mike Jones, currency strategist at Bank of New Zealand in Wellington. "That downbeat sentiment was reflected in the kiwi and Aussie."

The currency may trade between 82.10 US cents and 82.60 cents today, with investors looking at tomorrow's Chinese manufacturing figures, he says.

Recent Chinese data has painted an upbeat picture about industrial production in the world's second-biggest economy, and if that continues, the kiwi and Australian dollars may gain on Monday, Mr Jones says.

The kiwi was little changed at 78.81 Australian cents from 78.75 cents yesterday as central banks on both sides of the Tasman prepare to review monetary policy next week.

Traders are pricing a 77% chance the 3.25% target cash rate will be trimmed, according to the Overnight Index Swap curve.

New Zealand's Reserve Bank, which also meets next week, is being given a 14% chance of a cut to its 2.5% official cash rate, meaning Australia's yield advantage will probably narrow.

The currency slipped to 67.54 yen from 67.65 yen yesterday and declined to 51.27 British pence from 51.45 pence. It fell to 63.38 euro cents from 63.63 cents yesterday.

(BusinessDesk)

This article is tagged with the following keywords. Find out more about My Tags

2 Comments & Questions

Commenter icon key: Subscriber Verified

Really if the gains in NZD are based on more USD being printed and spent on New Zealand products we have a lot to worry about.

Why would we be willing to sell our products for a diluted currency like the USD?

New Zealand needs to live on its own production. Sure, let's sell our products to the world, but we should be getting something of real value that we can use to build our future not just short-term employment opportunities.

Reply
Share

...after Mr Boehner said US President Barack Obama has to get "serious" about spending cuts.

Just wow. The man has some gall, given the only things he will allow cuts on are social programmes benefiting the poorest, rather than (for instance) the country's massive defense budget, etc.

Reply
Share

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7850 0.0000 0.00%
AUD 0.8924 0.0000 0.00%
EUR 0.6196 0.0000 0.00%
GBP 0.4880 0.0000 0.00%
HKD 6.0917 0.0000 0.00%
JPY 84.8970 0.0000 0.00%

Commods

Commodity Price Change Time
Gold Index 1231.3 2.700 2014-10-24T00:
Oil Brent 86.1 -0.700 2014-10-24T00:
Oil Nymex 81.0 -1.020 2014-10-24T00:
Silver Index 17.1 0.020 2014-10-24T00:

Indices

Symbol Open High Last %
NZX 50 5292.8 5344.4 5292.8 0.77%
NASDAQ 4459.5 4486.3 4452.8 0.69%
DAX 9008.6 9044.9 9047.3 -0.66%
DJI 16677.0 16811.7 16677.9 0.76%
FTSE 6419.1 6419.1 6419.1 -0.47%
HKSE 23311.9 23352.6 23333.2 -0.13%
NI225 15354.4 15377.0 15139.0 1.01%