Kiwi falls below US80c

Wednesday 4th May 2011

The New Zealand dollar fell below US80c today and dealers said a driver of the move was selling on the cross rate against the Australian dollar.

The NZ dollar was at US79.21c at 5pm, down from US80c at 8am and US80.47c at 5pm yesterday.

"Selling of kiwi versus aussie was most notable feature of the day. That had the effect of knocking kiwi down more generally," said Mike Jones, a strategist at BNZ.

He said traders may have been adjusting positions ahead of notoriously volatile New Zealand unemployment data tomorrow but the main driver was perceptions of interest rate differentials between the two countries.

"We are stating to see people bring forward the timing of next Reserve Bank of Australia rate hike, while the Reserve Bank of New Zealand is on the sidelines," Jones said.

The NZ dollar was at A73.21c at 5pm, its lowest since March. This was down from A73.75c at 5pm yesterday.

The US dollar has been firmer in recent sessions, helped by profit-taking from a sustained period of weakness.

Many Asian equity markets were weak today as falling commodity prices spooked investors. Commodities had their biggest one-day loss in two weeks, pulling stocks on Wall Street down as well, after fear that huge price gains last month had made everything from oil to silver too costly.

The NZ dollar was at 64.10 yen at 5pm from 65.18 yen at the same time yesterday. It was at 0.5351 euro, down from 0.5432 euro at the same time yesterday. It is around five weeks lows against the euro.

It was at 67.56 on its trade weighted index from 68.42 yesterday.

NZPA

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