Kiwi heads for 1% October slide, pushing 2.5 US cts range to 7 weeks
BUSINESSDESK: The New Zealand dollar headed for a 1% decline against the greenback in October, extending its 2.5 US cents range to seven weeks as New York City counts the cost of superstorm Sandy and as investors look forward to next week's US presidential election.
The kiwi traded at 82.17 US cents at 5pm in Wellington from 82.07 cents at 8am and 82.01 cents yesterday. The trade-weighted index was little changed at 73.26 from 73.30 yesterday, and is poised for a 0.7% monthly decline.
New Zealand's currency has traded between 81 US cents and 83.50 cents since September 12 as investors remain cautious about the next step for the US, which will elect its administration on November 6. The storm in New York City which shuttered the stock exchange added to uncertainty as trading in the America's financial hub halted.
"The 2.5 cent range getting traded is nudging the record nine weeks of a very narrow range we had in March," says Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "We haven't had any bad news anywhere apart from the storm" and he expects the kiwi will end the week higher.
Before next week's US election investors will be watching America's non-farm payrolls data, as employment is the Federal Reserve's biggest bugbear at the moment.
The US central bank wants to seek signs of life in the labour market before it starts removing the extraordinary stimulus it has added through near-zero interest rates and printing money.
Chinese manufacturing figures later tomorrow will also be watched after an indicator showed industrial production is not slowing as fast as analysts feared.
New Zealand building consents grew 7.8% last month according to government figures, indicating the Canterbury rebuild is gathering pace. The reconstruction of New Zealand's second-biggest city is seen as a major boost to economic growth and activity, and could lead to inflationary pressures if capacity constraints seep into the wider economy.
Yesterday, the Bank of Japan expanded its asset-purchase program by 11 trillion yen to 66 trillion yen, almost meeting expectations, as the world's third-biggest economy struggles to revive a stagnant growth.
The kiwi edged down to 65.38 yen from 65.45 yen at 5pm in Wellington yesterday.
It slid to 79.15 Australian cents from 79.29 cents and fell to 63.39 euro cents from 63.51 cents yesterday. It traded at 51.08 British pence from 51.14 pence yesterday.