The New Zealand dollar weakened along with the Australian dollar after the Reserve Bank of Australia indicated it still has an easing bias, stoking speculation it will cut interest rates next month and eroding the appeal of the down-under currencies.
The kiwi fell to 81.56 US cents from 81.86 cents at 5pm in Wellington yesterday and the trade-weighted index dipped to 73.28 from 73.44. The Australian dollar weakened to $US1.0368 from $US1.0413.
The minutes of the Australian central bank's November 6 meeting, released yesterday, showed the bank thought that more interest rate cuts may be needed to enliven the economy as spending in the resources sector wanes.
Australia is New Zealand's biggest market and the two currencies are often tarred with the same brush.
Westpac Banking Corp economists expect the RBA will cut the cash rate from 3.25% when it meets next month and "if anything became more confident in their forecasts" after the minutes were released, says Imre Speizer, a strategist at the bank.
The kiwi and Australian dollars suffered even in the face of more positive global news overnight, including comments from Hamas that Palestinians are willing to accept a ceasefire with Israel, the Spanish Treasury sold 4.94 billion euros of bills, exceeding its target, and as European finance ministers meet in Brussels to discuss ways to fill a 15 billion euro gap in Greece's public accounts.
"The Aussie and the kiwi performed poorly overnight even though the news flow was positive," Mr Speizer says.
Stocks fell on Wall Street even after figures showed new home building rose to a four-year high last month.
The kiwi fell to 63.67 euro cents from 63.90 cents and dropped to 51.18 British pence from 51.43 pence. It was little changed at 78.60 Australian cents and edged up to 66.58 yen from 66.50 yen.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- NZ beef exports to Taiwan rise to a record, propelling it to third largest market
- Gareth Morgan wades into Awaroa beach
- Chief Justice Elias and hubby Fletcher hit with wet bus ticket over stock in lake
- MARKET CLOSE: NZ shares fall on weak global sentiment; Xero, Spark, A2 drop, Warehouse rises
- Housing NZ directors get 63% pay hike
Most listened to
- Green party co-leader James Shaw and Business NZ's John Carnegie go head-to-head on the ETS review
- Cream Trading CEO Kevin O'Sullivan on why dairy companies might want to sign up to the new trading platform
- Paul Brislen on the merits of "cutting off the money" versus Netflix' technical attempts to shut-out unblockers
- Westpac's Dominick Stephens says dairy prices are still a major concern, despite El Niño fears fading
- London School of Economics Professor John Kay discusses financial regulatory shortcomings