NZ dollar drops to five week low against Aussie

Tuesday 7th December 2010

The New Zealand dollar fell to a five-week low against the Australian currency ahead of the Reserve Bank of Australia's review of interest rates later today, the last review across the Tasman before February.

The kiwi briefly dropped under A76.80c early today and at 8am was at A76.93c, down from A77.20c at 5pm yesterday.

ANZ bank said a change to the Australian cash rate was not expected in the 4.30pm (NZT) announcement, but the words around it may result in some volatility on the cross of the NZ dollar with the aussie.

Any attempt to break above A77.30c was unlikely as focus then turned to Thursday's interest rate announcement in this country, which should deliver further downside moves for the cross, ANZ said.

The NZ dollar was little changed against the US dollar, buying US76.18c at 8am, and edged up to 0.5721 euro.

The euro fell broadly as traders took profits from a three-day rally on signs of division over how to contain the euro zone's fiscal crisis.

The euro's weak performance came as euro zone finance ministers met under pressure to boost the size of a rescue fund to stop a debt crisis from spreading.

ANZ said that with no major data out, markets were left to ponder Federal Reserve Chairman Ben Bernanke's comments in a television interview that it was possible US monetary policymakers could increase the $US600 billion in asset purchases announced at the last Fed meeting.

The New Zealand trade weighted index was down to 68.56 at 8am today from 68.65 at 5pm, while the NZ dollar slipped to 62.95 yen from 63.19.

NZPA

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