NZ dollar falls as oil retreats
The kiwi dropped to 66.70USc at 8am in Wellington.
The New Zealand dollar fell after oil weakened on concern that an oversupply may continue, driving investors away from currencies linked to commodities.
The kiwi dropped to 66.70USc at 8am in Wellington, from 66.98USc at 5pm yesterday. The trade-weighted index declined to 72.49 from 72.71 yesterday.
Investors shied away from growth assets such as equities and currencies of commodity producing countries after Saudi Arabia's oil minister Ali al-Naimi said the country won't cut output and Iranian oil minister Bijan Namdar Zanganeh called last week's agreement between Saudi Arabia and Russia to freeze oil production at January levels "ridiculous," stoking concerns an oversupply won't reverse at any time soon. That dashed hopes that oil prices may be headed for a recovery, which would bolster the outlook for inflation and interest rates.
"Market sentiment softened overnight," ANZ Bank New Zealand agri-economist Con Williams and senior foreign exchange strategist Sam Tuck said in a note. "In the oil market, it continues to be political ping pong between many of the large 'traditional' producers on whether or not they have the will to work together to cap supply. We place a very low probability on this being the case, as evidenced by last night's scuttlebutt."
ANZ expects the kiwi to continue to follow global sentiment, noting it will probably trade between 66.30USc and 67.30USc today.
Traders will be eyeing upcoming speeches by Federal Reserve vice-chairman Stanley Fischer, Richmond Fed president Jeffrey Lacker and Dallas Fed president Robert Kaplan for an indication of the US interest rate outlook. The US also publishes the Markit services PMI and new home sales.
In Australia, data on employment and construction are scheduled for release.
The New Zealand dollar fell to ¥74.73 from ¥75.08 yesterday, dropped to 4.3530 yuan from 4.3726 yuan, slipped to 60.53 euro cents from 60.64 and declined to 92.43Ac from 92.71Ac. It gained to 47.56 British pence from 47.46 pence.
(BusinessDesk)
Tina Morrison
Wed, 24 Feb 2016
Wed, 24 Feb 2016
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
NZ dollar falls as oil retreats
55824