Kiwi climbs on TWI basis as eurozone, UK look shaky
Investor wariness of Europe has re-emerged after Italy had its credit rating cut this week and Portugal's government becomes increasingly fragile.
The New Zealand dollar climbed above 75 on a trade-weighted basis for the first time in five weeks as weakness in the European and British economies comes back into focus.
The kiwi TWI rose as high as 75.40, trading at 75.16 at 5pm in Wellington from 74.69 yesterday. It was little changed at 78.51 US cents at 5pm from 78.60 cents at 8am and up from 78.03 cents yesterday.
Investor wariness of Europe has re-emerged after Italy had its credit rating cut this week and Portugal's government becomes increasingly fragile.
The region's protracted recession was one reason behind the International Monetary Fund's cut to forecast global growth and European Central Bank official Joerg Asmussen suggested the monetary authority was unlikely to change its accommodative stance for at least 12 months.
"We've had pretty soft UK data and pretty dovish talk from the ECB speaker, and Italy getting its credit rating cut - all of these things weigh on the currencies," says Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "The kiwi can continue to outperform on the crosses."
The local currency rose to 61.43 euro cents from 60.62 cents yesterday, and advanced to 52.75 British pence from 52.25 pence.
The kiwi's recent gains against the greenback were tempered today by weaker than expected headline Chinese trade figures, which is Australia's biggest trading partner and New Zealand's second largest.
Finance Minister Bill English told a business audience in Wellington local interest rates will rise eventually, even if that risks pushing up the kiwi dollar. Traders have priced in 69 basis points of increases in the key interest rate over the coming 12 months, according to the Overnight Index Swap curve.
The kiwi was unchanged at 85.49 Australian cents at 5pm from yesterday, and gained to 79 yen from 78.55 yen.
(BusinessDesk)
Paul McBeth
Wed, 11 Jul 2018
Wed, 11 Jul 2018
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Kiwi climbs on TWI basis as eurozone, UK look shaky
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