Kiwi heads for 1.2% monthly decline before Jackson Hole summit
BUSINESSDESK: The New Zealand dollar headed for a 1.2% monthly decline in the lead-up to the central bankers' summit at Jackson Hole, Wyoming, and as investors become more pessimistic about China's economic fortunes.
The kiwi increased to 79.92 US cents at 5pm in Wellington from 79.82 earlier and down from 80.13 cents yesterday. It declined to 71.94 on a trade-weighted basis from 72.05 yesterday.
Central bank officials are gathering in Jackson Hole for their annual summit today, with Federal Reserve chairman Ben Bernanke set to kick off the event with his keynote address.
Traders have pared their bets Bernanke will firm up plans for a third round of quantitative easing after better than expected US data, and as European policymakers prepare to embark on their own measures to strengthen that region's fragile financial health.
"We go into tonight with a sense that if anything we might be slightly disappointed," says Robert Rennie, chief currency strategist at Westpac Banking in Sydney.
The kiwi has "weakened over the last week" and Mr Rennie says he expects it will trade between 79.30 US cents and 80.30 cents before the market closes.
Traders will be looking at China's manufacturing figures tomorrow with a slump in iron ore prices sparked fears the world's second-biggest economy will continue to slow in the third quarter.
"That's not a really good environment for the Aussies and kiwis of this world," Mr Rennie says.
The London fix, where institutional investors assess their asset allocations at the end of a period, will add volatility to trading as traders return to their desks after the summer holiday in the Northern Hemisphere.
The kiwi slid to 63.85 euro cents from 63.93 cents yesterday and slipped to 50.59 British pence from 50.64 pence. It was unchanged at 77.58 Australian cents and fell to 62.65 yen from 63 yen yesterday.