NZ dollar starts week on backfoot as oil prices slump

Monday 26th November 2018

The New Zealand dollar kicked off the week on the backfoot as a slump in oil prices on Friday weighed on commodity-sensitive currencies.

The kiwi traded at 67.73 US cents as at 8am in Wellington from 67.79 cents on Friday in New York, and down from 68.06 cents in Asia last week. The trade-weighted index was almost unchanged at 74.09 from 74.10 last week.

Commodity-linked currencies including the New Zealand, Australian and Canadian dollars all fell on Friday as oil prices extended their decline, with Brent Crude down 6.1 percent at US$58.80 a barrel. Brent has slumped 32 percent from a peak on Oct. 3 amid growing fears of a global oversupply. Trading on financial markets was relatively quiet in the shortened Thanksgiving Day holiday week.

Traders face a busy week with third-quarter retail sales data today, the Reserve Bank's financial stability report on Wednesday, several Federal Reserve officials speaking, the release of minutes to the last Federal Open Market Committee policy meeting, and the G20 leaders' meeting where US President Donald Trump will meet his Chinese counterpart Xi Jinping.

"The kiwi finished the week below 68 cents in holiday-thinned trading," ANZ Bank New Zealand economists Sharon Zollner and Philip Borkin said in a note. "With little in the way of global data this week, markets will be focused on policy and politics, with key Fed speeches, FOMC minutes, and the G20 meeting. All up, we think markets will remain jittery."

The kiwi traded at 52.73 British pence from 52.74 pence last week and was at 59.68 euro cents from 59.74 cents after European leaders signed off on Britain's exit from the regional bloc. Brexit now needs to be ratified by the UK Parliament, which is seen as a higher hurdle to overcome.

The local currency traded at 76.43 yen from 76.53 yen last week and edged down to 93.52 Australian cents from 93.66 cents. It traded at 4.7029 Chinese yuan from 4.7078 yuan last week.

(BusinessDesk)

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