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NZ dollar falls against rising aussie


The kiwi was stuck in a range at lower levels against the greenback.

NZPA
Fri, 04 Feb 2011

The New Zealand dollar lost some ground against the Australian dollar and was stuck in a range at lower levels against the greenback on a day in which the Australian economy received another positive report card.

Weak economic indicators knocked the NZ dollar lower this week, but the Reserve Bank of Australia gave an upbeat assessment of the Australian economy, even after the recent floods today, and this boosted the Australian currency.

The NZ dollar was buying 75.95Ac at 5pm, down from 76.24Ac at 8am and 76.40Ac at 5pm yesterday.

It was at 77.40USc from 77.26USc at 8am and 77.17USc at 5pm yesterday.

"The New Zealand economy continues to be weighed down by deleveraging, and we know 2010 ended on a soft note," ANZ said. "Given the lags in reporting, this means the tempo of the data is likely to be soft for some time yet, with an improvement in data at least six weeks away."

ASB said that migration data today showed that migrant inflows were low but steady and departures were stabilising, particularly the numbers departing for Australia.

The data, along with short term visitor numbers, showed that the domestic economy remained subdued and the Reserve Bank of New Zealand was not likely to change the official cash rate until September.

Otherwise the euro was crunched after European Central Bank President Jean-Claude Trichet threw cold water on market expectations euro zone interest rates would rise anytime soon.

Trichet, speaking after the ECB's decision to keep interest rates at a record low 1% as expected, said euro zone inflation expectations remain "firmly anchored" and inflationary pressures over the medium to long term "should remain contained".

The NZ dollar was at €0.5675 at 5pm, from €0.5673 at 8am and €0.5594 euro at 5pm yesterday.

Adding to broad strength in the US dollar was data showing the US services sector grew in January at its fastest pace since August 2005 while new US claims for unemployment benefits fell sharply last week.

Expectations a recovery is taking hold pushed US 10-year Treasury yields north of 3.51%, above a range that has held solidly since mid-December. Higher bond yields make US dollar-denominated assets more attractive.

The NZ dollar was at ¥63.10 at 5pm from ¥62.96 at the same time yesterday. The trade weighted index rose to 68.56 from 68.25.

NZPA
Fri, 04 Feb 2011
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NZ dollar falls against rising aussie
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