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NZ dollar slides further in Asia trading, could be more downside to come

Thursday 31st August 2017

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The New Zealand dollar continued to slide after strong US data last night was coupled with weaker domestic business confidence and solid Australian business spending across the Tasman. 

The kiwi fell to 71.68 as at 5pm in Wellington from 71.94 US cents as at 8am in Wellington and the lowest since June 12. It was at 72.61 cents late yesterday. The trade-weighted index fell to 75.27  from 75.89.

"It is faltering quite badly after a significant break through the 71.90 zone," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. The move started overnight after the US private payrolls rose by 237,000 in August, beating estimates of a 185,000 gain and second-quarter gross domestic product in the US rose at a revised 3 percent annual rate against expectations of a 2.7 percent gain.

It softened on news that business confidence dipped in August versus July and pricing intentions dropped in the monthly ANZ survey. The trend decline in the New Zealand dollar got another boost from those more interested in the inflation story than the growth story," said BNZ head of research Stephen Toplis. 

News that Australian business investment rose in the second quarter while companies upgraded their spending plans for the year ahead bolstered the Aussie, weighing further on the kiwi, said Kelleher.  The New Zealand dollar was trading at 90.71 Australian cents from 90.91 cents yesterday.

Kelleher said the kiwi might have more downside to come as Europe opens later in the global trading day as "we are probably doing to see more (US) dollar strength." He also said some election uncertainty may be creeping into the market three weeks ahead of the vote.

The kiwi fell to 79.22 yen from 79.69 yen and to 4.7284 yuan from 4.7785 yuan. It slipped to 60.34 euro cents from 60.62 cents and declined to 55.44 British pence from 56.14 pence.

The two-year swap rate rose 1 basis point to 2.18  percent while the 10-year swaps rose 3 basis points to 3.14 percent.


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