NZ dollar falls as risk aversion rises
The Australian dollar followed, falling below parity with the US dollar for the first time this month.
The New Zealand dollar fell to a two-and-a-half-week low today as the greenback rose and the Australian dollar fell.
.The US dollar was boosted by data showing new jobless claims hit a two-and-a-half year-low, while the aussie dollar was knocked after the Reserve Bank of Australia said rates were likely to stay on hold for some time.
The NZ dollar was at 76.01USc at 5pm, down from 76.43USc at 8am and 77.07USc at 5pm yesterday. If fell to 76.04Ac from 76.14Ac at 8am and 76.42Ac at 5pm.
The NZ dollar also dropped to €0.5596 from €0.5622, as the European currency fell away against the greenback on worries over Europe's lack of progress in tackling its debt crisis.
ANZ bank said increased risk aversion and the weaker euro had been enough to see initial support levels for the NZ dollar tested and broken overnight, while data on the New Zealand economy today continued to be mixed.
ASB said a 1.8% rise in food prices in January was higher than expected and was due to the higher costs of fruit and vegetables. ANZ said food prices would be a key factor to watch during 2011.
News that activity was muted in the residential property market in January, according to a Real Estate Institute of New Zealand report, reinforced the possibility of a double-dip recession as signalled by Finance Minister Bill English this week.
This comment knocked the NZ dollar lower earlier this week. Today it was Reserve Bank of Australia Governor Glenn Stevens who captured the attention of investors.
He told a parliamentary committee that market pricing for no rate hike until late in the year was reasonable.
"I feel that the current level is about right for the medium-term outlook we have," he said.
The Australian dollar fell below parity with the US dollar for the first time since February 1 in the wake of his comments.
The NZ dollar trade weighted index was down to 67.94 at 5pm from 68.46 yesterday.
NZPA
Fri, 11 Feb 2011
Fri, 11 Feb 2011
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
NZ dollar falls as risk aversion rises
12278