The New Zealand dollar fell to a three-week low against the greenback after equities weakened and doubts grew on the ability of US Republicans and Democrats to reach agreement on averting the fiscal cliff.
The kiwi dollar slipped to 82.32USc from 82.37USc in New York on Friday and from 83.02USc in Wellington at 5pm on Friday. The trade-weighted index was at 73.69.
On Wall Street, the Dow Jones Industrial Average and the Standard & Poor's 500 Index both fell about 0.9% on Friday and traders were driven to the US dollar and the yen following Republican House Speaker John Boehner's failure to win support from his party for a compromise deal. Senator Joe Lieberman told CNN Boehner's stumble was "the first time I feel it's more likely that we'll go over the cliff than not."
The fiscal cliff talks "seem to be lurching along to a poor ending," said Tim Kelleher, head of institutional FX sales at ASB Institutional.
The decline in the Australian and New Zealand dollars was exacerbated by the biggest speculative long positions since 2003 in the currencies, making them more vulnerable when equities sold off on the back of the fiscal talks, he said. The kiwi dollar may trade in a range of 82-82.75USc today.
Failure to avert the fiscal cliff would mean some $US600 billion of tax increases and spending cuts kick in on January 1.
The New Zealand dollar traded at ¥69.42 from ¥69.36 on Friday in New York, near a two-week low. The local dollar traded at €0.62.45 euro from €0.62.49 and slipped to 50.89p from 50.96p. The kiwi traded at 79.15Ac from 79.12Ac.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Business Week in Review with Grant Walker & Andrew Patterson
- NBR Radio Rich List Special: Interviews with Rich Listers, philanthropists, property gurus, investors and much, much more
- “Trevor Mallard better watch out” - Matthew Hooton
- Rodney Hide on government spending
- Michael Coote thinks Donald Trump wants to flex his muscles by humiliatingly screwing over other countries