NZ dollar falls over China concerns
The New Zealand dollar fell after data showing stellar economic growth in China in 2010 fuelled speculation that Beijing may come under more pressure to tighten monetary policy.
The New Zealand dollar fell after data showing stellar economic growth in China in 2010 fuelled speculation that Beijing may come under more pressure to tighten monetary policy.
By 8am the kiwi was at US75.68c against the US dollar from US76.34c at 5pm yesterday, having dropped to a three-week low around US75.30c during the overnight session.
The greenback gained broadly as an array of data suggested the United States economy is firmly on a path of recovery, with stronger-than-expected data on jobless claims and existing home sales providing a glimmer of hope.
ANZ bank said the NZ and Australian dollars had been hard hit as commodity prices and equities fell in tandem, with the kiwi falling faster than the aussie as risk assets underperformed.
The economic data out of the US had been encouraging, with the jobless claims data suggesting the US labour market may be starting to improve.
"Perhaps the baton of growth will pass from China to the US this year. If so, the USD cold be the standout currency this year," ANZ said.
Overnight, the US dollar had gained against all major currencies, except the Mexican peso, with the catalyst appearing to be the concerns about more policy tightening from China.
Tighter Chinese policy would mean slower economic growth, and since China had been the sole economic powerhouse holding things up last year, markets were worried about the implications for global growth and commodity demand, ANZ said.
"Hence, the hit to commodities overnight, along with the commodity currencies with the NZD being the worst performer."
The NZ dollar was little changed at A76.68c at 8am, having dropped to a one-week low around A76.50c during the session. The kiwi also fell to a one-month low around 0.5610 euro, and by 8am had recovered only slightly to 0.5621, having fallen from 0.5678 at 5pm.
The kiwi edged up to 62.87 yen at 8am from 62.72 at 5pm, while the trade weighted index fell to 67.96 from 68.37.
NZPA
Fri, 21 Jan 2011
Fri, 21 Jan 2011
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NZ dollar falls over China concerns
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