NZ dollar slips after budget boost
The New Zealand dollar fell away overnight from yesterday's post-budget boost, but managed to clawback some of its losses against a broadly weaker greenback.
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The New Zealand dollar fell away overnight from yesterday's post-budget boost, but managed to clawback some of its losses against a broadly weaker greenback.
At 8am today the kiwi was buying US79.03c, down from US79.20c at 5pm, and after dipping briefly below US78.60c early today.
The US dollar dropped broadly as weak US economic data suggested the Federal Reserve will keep monetary policy ultra-loose for a while, keeping interest rate differentials unfavourable for the greenback compared to other currencies.
The Fed was widely expected to refrain from raising rates this year, and if economic data continued to disappoint it could push out Fed action until well into 2012 or perhaps even later.
"The Fed cannot raise rates in a slowing economic environment," said Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut.
Data showing a slowdown in manufacturing growth in the US mid-Atlantic region and an unexpected dip in existing home sales in April triggered US dollar selling and added to growing evidence that US economic prospects were far from upbeat.
The NZ dollar also dropped overnight from 0.5538 euro at 5pm to 0.5523 at 8am, and was down from A74.26c against the Australian dollar to A74.05c, and from 64.57 yen to 64.42. The trade weighted index was 68.34 at 8am from 68.57 at 5pm.
ANZ bank said moves higher by the NZ dollar yesterday had run into heavy selling, resulting in a corrective move overnight.
Having found a base the kiwi had managed to claw back to lurk around the US79c level, ANZ said.
In relative terms, the NZ dollar remained well supported, and while the base at US77.50c held in the broader picture, moves higher were possible, even through US80c.
NZPA
Fri, 20 May 2011
Fri, 20 May 2011
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NZ dollar slips after budget boost
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