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NZ dollar pares overnight losses; UK election gets initial approval

Wednesday 30th October 2019

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The New Zealand dollar pared its overnight losses after  UK Prime Minister Boris Johnson won preliminary approval for a Dec. 12 election.

The kiwi was trading at 63.53 US cents at 8am in Wellington from 63.67 at 5pm. It had dipped to 63.37 cents overnight. The trade-weighted index was at 70.20 versus 70.37.

Johnson’s bill for an early election was approved without a vote at its second reading on Tuesday, suggesting it has overwhelming support as it heads towards its final stage in parliament, Reuters reported.

However, volatility is expected as lawmakers vote on amendments, including one that seeks to change the date to Dec. 9.

The New Zealand dollar is “very reactive to the ebb and flow of all things Brexit reflecting sentiment,” said Stuart Ive, OMF Treasury manager.

The kiwi also benefited when the US dollar dipped on weaker consumer confidence. According to the Conference Board, confidence decreased marginally in October, following a decline in September and August. The Index now stands at 125.9, down from 126.3 in September.

The expectations sub-index – based on consumers’ short-term outlook for income, business and labour market conditions – declined from 96.8 last month to 94.9 this month.

“Expectations weakened slightly as consumers expressed some concerns about business conditions and job prospects,” said Lynn Franco, director of economic indicators at the Conference Board.

The main focus, however, continues to be on the US Federal Reserve’s rate decision, due early Thursday New Zealand time.

Ahead of that, ANZ economists Susan Kilsby and Miles Workman said Australia’s inflation data will be on the radar. A surprise “Australian CPI print today could see NZD caught in the crossfire.”

The New Zealand dollar was at 92.56 Australian cents from 92.93, at 49.41 British pence from 49.56, at 57.18 euro cents from 57.38, at 69.15 yen from 69.37, and at 4.4887 Chinese yuan from 4.4931.

(BusinessDesk)



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