NZ dollar takes a breather after bout of Brexit volatility

Wednesday 29th June 2016

The New Zealand dollar was little changed as traders took a breather following a period of volatility after the UK voted to leave the European Union last week.

The kiwi traded at 70.39 US cents at 8am in Wellington, from 70.44 cents at 5pm yesterday. The trade-weighted index slipped to 75.58 from 75.70 yesterday.

Global sentiment improved overnight as the British pound stabilised and equity markets turned positive following the initial shock after the Brexit vote late last week. That bolstered investor demand for higher risk assets such as the kiwi and Aussie currencies and reduced demand for safe havens such as the Japanese yen and gold

"The markets have taken a huge hit and experienced a tremendous bout of volatility," said Peter Cavanaugh, an adviser at Bancorp Treasury Services. "There's no more alarming news out there. It's appropriate the market takes stock after such a big move and huge volatility. The next question is where are we likely to go to. The underlying cause hasn't gone away so it's a fragile truce."

Bancorp's Cavanaugh said liquidity was thin as traders were cautious during this period of uncertainty.

In New Zealand today, the Reserve Bank releases its foreign exchange data for May at 3pm.

The New Zealand dollar dipped slightly against other major currencies, slipping to 95.28 Australian cents from 95.34 cents yesterday, to 63.52 euro cents from 63.67 cents, and to 52.71 British pence from 52.98 pence. It gained to 72.24 yen from 71.83 yen, and to decreased to 4.6794 yuan from 4.6824 yuan.

BusinessDesk.co.nz

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