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.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Green party co-leader James Shaw and Business NZ's John Carnegie go head-to-head on the ETS review
- Cream Trading CEO Kevin O'Sullivan on why dairy companies might want to sign up to the new trading platform
- Paul Brislen on the merits of "cutting off the money" versus Netflix' technical attempts to shut-out unblockers
- Westpac's Dominick Stephens says dairy prices are still a major concern, despite El Niño fears fading
- London School of Economics Professor John Kay discusses financial regulatory shortcomings