Kiwi falls as focus shifts to stalemate over fiscal cliff
The New Zealand dollar fell as investors sharpened their focus on the stalled negotiations between American policymakers on how to prevent $US607 billion in spending cuts and tax hikes, which may push the world's biggest economy back into recession.
The kiwi fell to 81.95 US cents at 8.30am in Wellington from 82.25 cents yesterday. The trade-weighted index declined to 73.39 from 73.50 yesterday.
Stocks on Wall Street declined in spite of good economic data as traders grew more pessimistic about legislators' ability to cut a deal and avert the so-called fiscal cliff.
Two-thirds of Americans surveyed in a CNN poll fear the US will face severe economic difficulties if politicians in Washington cannot resolve their differences before the cuts and new taxes kick in on January 1.
Markets shifted their focus to the US after European finance chiefs yesterday cut a deal to give Greece a sweeter deal in its rescue package.
"The Greek thing was a positive but the market didn't run away with it because of the hang of the fiscal cliff," says Imre Speizer, market strategist at Westpac Banking in Auckland. "The kiwi will look at testing 81.65 US cents, which is the next big level."
The kiwi dollar was little changed at 63.37 euro cents from 63.36 cents yesterday after European finance ministers reached accord over how to grant Greece its next tranche of rescue funds after official sector investors in the Mediterranean nation's bonds, including the European Central Bank, balked on writing down their assets.
Traders will be looking for Australian capital expenditure figures tomorrow, which are expected to show the world's 12th biggest economy might be starting to slow down after the resources boom gave it a buffer during the global financial crisis.
The kiwi was little changed at 78.45 Australian cents from 78.48 cents yesterday.
"If that's the case, then the Reserve Bank of Australia might not just cut the target cash rate by 50 basis points, but much more," Mr Speizer says.
New Zealand's currency slipped to 51.15 British pence from 51.29 pence yesterday and slid to 67.39 yen from 67.44 yen.