NZ dollar 'poised for a correction'
The New Zealand dollar dropped again this morning, falling below 87USc as global markets had another attack of the heebie jeebies.
The New Zealand dollar dropped again this morning, falling below 87USc as global markets had another attack of the heebie jeebies.
The US debt ceiling deal was finally passed by the US Senate this morning, but the - temporary - solution to the political crisis only appears to have focused investors' minds on the truly alarming underlying economic state of the union.
But a further factor appears to be the Reserve Bank of Australia's decision yesterday afternoon to hold interest rates. The Australian dollar fell following the decision, and the New Zealand dollar seems to have been - partly - caught up in the wake of that fall, although the NZ currency did not tumble as far.
But the New Zealand/US cross-rate, which breached the 88USc mark earlier in the week for the first time ever, now appears to be falling. The currency has been universally viewed as being over-valued, but until the past 24 hours there has been no sign of it falling back to more realistic levels.
However that fall now seems to be under way.
The New Zealand/ United States cross-rate is "poised for a correction" said Daily FX currency analyst David Song.
The currency was likely to be somewhere between 86.27USc and 86.40USc by the end of today, he said.
A further factor is the a fall in the dairy price, which fell 1.3% in the GlobalDairy auction overnight - the fifth such fall in a row. Dairy prices have now fallen nearly 23% since March.
Rob Hosking
Wed, 03 Aug 2011
Wed, 03 Aug 2011
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
NZ dollar 'poised for a correction'
16180