NZ dollar declines as investors favour US dollar amid global growth worries

Friday 10th October 2014

The New Zealand dollar declined as investors regained confidence in the outlook for the US economy amid uncertainty about growth in other regions.

The kiwi slipped to 78.53 US cents at 8am in Wellington, from 79.40 cents at 5pm yesterday. The trade-weighted index fell to 76.39 from 76.96 yesterday.

The dollar index, which measures the greenback against a basket of currencies, advanced as investors turned to the world's largest economy amid uncertainty about growth in other areas such as Europe. A report showed German exports tumbled 5.8 percent in August, their steepest fall since the 2009 recession. That follows weaker data for German August factory production and new orders earlier in the week, sparking concern about the strength of Europe's largest economy.

"The market is a little bit erratic at the moment," said Stuart Ive, senior dealer, foreign exchange, at OMF. "Overnight, the market has suddenly remembered that the global growth situation is a lot worse than the American one and we actually need to buy US dollars. Europe is under a lot of strain.

"Overnight it was a flight to quality which is the US dollar," Ive said. "If you put it in a global perspective, America is actually not that bad a place after all."

The New Zealand dollar has support today at 78.15 US cents and faces resistance at 78.80 cents, he said.

Today, traders will be keeping an eye out for news from the Group of 20 nations' meeting of finance ministers in Australia, the escalating Ebola situation and the annual meeting of the International Monetary Fund.

The New Zealand dollar edged up to 89.51 Australian cents from 89.47 cents yesterday, fell to 61.89 euro cents from 62.30 cents, declined to 48.71 British pence from 49.05 pence and dropped to 84.62 yen from 85.68 yen.

BusinessDesk.co.nz

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