NZ dollar holds near 72.50USc as Germany's Merkel moves closer to forming govt

The New Zealand dollar was little changed around 72.50 US cents as German chancellor Angela Merkel moved a step closer to forming a coalition government, boosting demand for the euro.

The kiwi traded at 72.56 US cents as at 8am in Wellington from 72.54 cents on Friday in New York. The local currency was unchanged at 59.41 euro cents from the New York close.

The euro gained after Merkel's Christian Democrats and former coalition partner Social Democrats agreed to formal negotiations on Friday after reaching a series of compromises over a variety of issues. Germany has been operating under a caretaker government since the September election threw up an uncertain outcome. Meanwhile, the greenback remained out of favour with the Dollar Index falling 1 percent despite higher-than-expected December core US inflation and robust retail sales. US markets are closed for the Martin Luther King Jr holiday today.

"One might have expected a stronger USD to prevail after the stronger than expected data, but support for the USD was fleeting and it ended lower for the day against all the majors apart from the NZD," Bank of New Zealand currency strategist Jason Wong said in a note. "The NZD's underperformance likely represents some fatigue after its storming performance at the end of last year and early this year."

Local data today include December food prices, which will provide a steer ahead of next week's fourth-quarter inflation figures.

The kiwi traded at 91.58 Australian cents from 91.60 cents on Friday in New York and was little changed at 4.6814 Chinese yuan from 4.6821 yuan. It traded at 80.48 yen from 80.45 yen last week and was little changed at 52.73 British pence from 52.76 pence. The trade-weighted index was unchanged at 74.93.

(BusinessDesk)

Sophie Boot
Mon, 15 Jan 2018

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NZ dollar holds near 72.50USc as Germany's Merkel moves closer to forming govt