NZ dollar falls as greenback recovers with weakening Irma, quiet North Koreans

Monday 11th September 2017

The New Zealand dollar fell as fears around the US dollar eased with the weakening strength of Hurricane Irma, the lack of further weapons testing by North Korea and less demand for safe havens such as the yen and gold.

The kiwi traded at 72.45 US cents as at 5pm in Wellington from 72.66 US cents on Friday in New York and down from 73.21 cents in Wellington at the end of last week. The trade-weighted index fell to 75.17 from 75.59 in New York.

Power was cut to more than one million people in Floria and cranes buckled in Miami as the Category 4 hurricane made land in the US but financial markets had been bracing for an economy denting storm that could delay further interest rate hikes in the US. Meanwhile, North Korea celebrated its 69th anniversary without testing any missiles or nuclear bombs alleviating concern it would use the occasion to flaunt its fire power.

"There's been quite a bit of unwinding of the trade we saw on Friday and that is across the board unwinding of safe haven trades," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. That together with no further action by North Korea and a hurricane that was not as bad were part of "a combination of things working together" to help lift the greenback.

The kiwi didn't move much after figures showed New Zealand retail spending on electronic cards fell 0.2 percent in August from July, seasonally adjusted. Weak growth in spending "reflects the softness in prices, particularly for imported consumer goods," Westpac Banking Corp senior economist Satish Ranchhod said in a note. "However, it’s likely that the softening in the housing market is also playing a role in depressing household spending."

The kiwi dollar rose to 4.7121 yuan from 4.7045 yuan in New York and down from 4.7221 yuan in Wellington at the end of last week. The People's Bank of China said it would remove a 20 percent foreign exchange margin for financial institutions buying US dollars, a move that may signal discomfort with the strong Chinese currency against the greenback which hurts exporters.

The kiwi traded at 89.97 Australian cents from 90.11 cents in New York and fell to 78.56 yen from 78.68 yen. It was at 54.98 British pence from 55.02 pence and traded at 60.29 euro cents from 60.34 cents.

The two-year swap rate rose 2 basis points to 2.15 percent while the 10-year swaps rose 3 basis points to 3.05 percent.

(BusinessDesk)

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