The New Zealand dollar fell in afternoon trading after the National Bank of New Zealand Business Outlook (NBBO) survey showed confidence slid for a third consecutive month.Earlier, the Australian dollar fell on softer than expected consumer price index (C
The New Zealand dollar fell in afternoon trading after the National Bank of New Zealand Business Outlook (NBBO) survey showed confidence slid for a third consecutive month.
Earlier, the Australian dollar fell on softer than expected consumer price index (CPI) data, dragging the NZ dollar with it but the NZ dollar rose against the Australian dollar.
The NZ dollar was 72.92USc at 5pm from 73.27USc at 8am and 73.41USc at 5pm yesterday. It rose to 81.60Ac from 81.40Ac yesterday. The Australian dollar fell to 89.32USc from 90.18USc yesterday.
The Australian headline CPI rose 0.6% in the June quarter, modestly lifting the annual inflation rate to 3.1%. This outcome was well below consensus.
"Since the release of the business confidence survey kiwi fell about 40 points," said Murray Hindley, chief currency dealer at ANZ.
He said earlier there was an unwinding of aussie-kiwi long positions, which kept the NZ dollar bid as people liquidated out of Australian dollars.
"The pace of economic recovery, but not the recovery itself, has shifted down a gear according to the latest NBBO," said Philip Borkin, economist at GoldmanSachsJBWere.
"Most worryingly, the sub-components of the survey around employment, investment and profits are softening again, although pricing intentions fell, which will be mildly welcomed by the Reserve Bank."
Attention is now turning to the RBNZ's official cash rate decision at 9am tomorrow. The central bank is expected to hike the official cash rate to 3% from 2.75% even though the economic recovery is fragile.
On Tuesday night the NZ dollar pushed up to a six-month high close to 74USc but then fell away quickly.
BNZ markets strategist Mike Jones said that for the most part, the NZ dollar tracked gyrations in risk appetite and global equity markets.
Earlier in the night, upbeat European economic data and solid profit announcements from UBS and Deutsche Bank buoyed optimism about the global outlook, Mr Jones said.
But another disappointing read on US consumer confidence released later in the overnight session eroded investors' risk appetite and the safe haven currencies staged a comeback.
The NZ dollar was at ¥63.97 at 5pm, having risen to a five-week high ¥64.68 on Tuesday night from ¥63.84 at 5pm on Tuesday.
The NZ dollar slipped to €0.5611 at 5pm from €0.5648 yesterday.
The trade weighted index was 68.21 at 5pm from 68.39 yesterday.
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