NZ dollar cedes overnight gains as commodities drop, stocks fall
The New Zealand dollar gave up its overnight gains, to be little changed from yesterday, after commodity prices fell and US stocks weakened, taking the wind out of growth-linked currencies such as the kiwi.
The New Zealand dollar traded at 79.30 US cents, from 79.27 cents at 5pm in Wellington yesterday. It reached as high as 79.84 cents in New York trading. The trade-weighted index was at 72.22 from 72.18 yesterday.
The Thomson Reuters/Jefferies CRB Commodity Index of 19 commonly traded commodities fell 1.4 percent as the end of an oil worker strike in Norway weighed on crude and figures yesterday showed China's imports are growing slower than expected. Shares on Wall Street fell after disappointing results from firms including chip maker Advanced Micro Devices, causing investors to fret about a weak earnings season.
"We've seen a continuation of equity weakness ahead of earnings and in the New York session there was a big selloff in commodity prices" which has weighed on the kiwi, said Tim Kelleher, head of institutional FX sales at ASB Institutional.
Also denting global sentiment, Italy's Prime Minister Mario Monti said he can't rule out having to tap the region's bailout fund in the future. Monti won't seek another term in office when the current one expires next year.
The kiwi dollar rose to 64.76 euro cents from 64.54 cents.
Kelleher said the kiwi dollar may trade in a range of 79.10 US cents to 79.60 cents with "a slow drift off" during the day. Against the euro, the range may be 64.5 euro cents to 65 cents.
Locally today, the only economic data scheduled is accommodation figures due out this morning. Consumer confidence and the performance of manufacturing monthly series are released tomorrow.
The kiwi dollar traded at 77.85 Australian cents, down from 78.10 cents yesterday. It was little changed at 51.13 British pence and traded at 62.99 yen, down from 63.04 yen.
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