Kiwi slips against yen after Bank of Japan action disappoints
BUSINESSDESK: The New Zealand dollar fell against the yen after the Bank of Japan added to its monetary easing, though not enough to weaken its currency appreciably, while markets remain subdued in the wake of Sandy and ahead of US presidential elections.
The kiwi bought 65.32 yen from 65.45 yen at 5pm in Wellington yesterday. The local currency traded at 82.07 US cents from 82.01 cents.
The yen rose against most of its trading peers after the BOJ expanded its asset-purchase program by 11 trillion yen to 66 trillion yen, about meeting expectations.
The kiwi did not get much overnight direction from equity markets, typically correlated with the currency because they are both growth assets, as Wall Street remained closed as New York was buffeted by the superstorm.
"The BOJ stuck to the script, doing just enough to placate the government but no more," says Mike Jones, currency strategist at Bank of New Zealand. The BOJ "continues to disappoint investors looking for a bazooka approach such as the Fed is using".
Traders will be looking at September residential building consents figures, out today, which may confirm rebuilding in Christchurch is getting under way in earnest, which would be a positive for sentiment on the kiwi dollar. Mr Jones says BNZ is expecting a monthly lift of 5%.
"Markets are treading water as we wait for the US election (on November 6)."
The trade weighted index fell to 73.18 from 73.30 and the kiwi weakened to 79.11 Australian cents from 79.29 cents.
The currency fell to 63.31 euro cents from 63.51 cents after better-than-expected earnings from Deutsche Bank, UBS and BP and an Italian 7 billion euro bond sale that drew solid demand.
The kiwi raded at 51.06 British pence from 51.14 pence yesterday.