Kiwi falls as stimulus hopes fade ahead of Jackson Hole summit
BUSINESSDESK: The New Zealand dollar fell as hopes fade the Federal Reserve will reveal fresh details of monetary stimulus and Spain delays asking for a bailout ahead of the central bank summit at Jackson Hole, Wyoming.
The kiwi fell to 79.82 US cents, the lowest since July 25, from 80.13 cents yesterday. It decreased to 63.78 euro cents, the lowest since July 3, from 63.93 cents and the trade weighted index declined to 71.88 from 72.05.
Equity markets on both sides of the Atlantic fell as hopes for an immediate monetary boost from the Fed diminish ahead of this weekend's central bankers' retreat in Jackson Hole.
Spain's Prime Minister Mariano Rajoy said his government would delay deciding whether to seek a sovereign bailout until the aid conditions are clear.
Wall Street's Dow Jones Industrial index slipped 0.8% and the Standard and Poor's 500 index shed 0.5%. Germany's DAX 30 index dropped 1.6%.
"The markets are long on Aussie and kiwi – there is some profit taking ahead of Jackson Hole," says Tim Kelleher, head of institutional FX sales NZ ASB Institutional, referring to the position where traders bet an asset will appreciate.
"The US data is not that bad. I would have thought Bernanke would sit on his hands – the US economy seems to be slowly coming into life."
The latest US reports showed consumer spending increased 0.4% in July, while incomes climbed 0.3% for a third month, government figures show.
Investors will be looking to the release of China's manufacturing figures tomorrow after falling iron ore prices and a slowing of the world's second largest economy sparks fears it may be coming to the end of Australia's resources boom.
There is no significant New Zealand data set for release today.
The kiwi edged down to 77.49 Australian cents at 8am from 77.58 cents yesterday at 5pm and decreased to 62.73 yen from 63 yen. It slipped to 50.51 British pence from 50.64 pence yesterday.