Friday 13th January 2012
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The New Zealand dollar fell against the euro and the greenback following better-than-expected demand for Spanish and Italian government debt and disappointing US retail sales figures.
The kiwi fell to 61.88 euro cents after trading at 62.76 cents yesterday, the highest since the common currency was released in 2002, up from 62.59 cents at 5pm. The local dollar fell to 79.35 US cents, from 79.62 cents at 5pm.
Spanish and Italian borrowing costs declined at auctions, fueling speculation the European sovereign-debt crisis is easing and European Central Bank attempts to boost liquidity are working. Spain sold 10 billion euro bonds, twice the target for the sale, at an average yield of 3.4 percent, down from 5.2 percent in December, while Italy sold 12 million euros of bills at 2.7 percent from 5.9 percent.
“We saw debt fears reduced across the euro zone,” said Mike Jones, currency strategist at Bank of New Zealand. “There has been some aggressive kiwi-euro selling, with euro sentiment brightening overnight.”
“The New Zealand dollar was one of the strongest performing currencies earlier in the week but all that work has been undone.”
The ECB left its benchmark rate at 1 percent, though it is expected to lower borrowing costs by a further 25 basis points to 0.75 percent by the end of the first quarter, while the Bank of England will keep its main rate at 0.5 percent, according to economists forecast complied by Bloomberg.
The kiwi weakened against the US dollar after figures showed American retail sales increased 0.1 percent in December, falling short of the 0.3 percent gain forecast in a Bloomberg survey of economists, confirming a slowdown in consumer spending for the start of 2012 in the world’s biggest economy.
The currency also fell after the ANZ Commodity Price Index, released yesterday, showed prices for the nation’s export commodities fell 0.8% in December
In New Zealand, the only economic figures today may be the Real Estate Institute’s monthly property sales data.
The kiwi was down at 76.8 Australian cents from 77.20 yesterday, it traded at 51.75 British pence from 51.91 pence and 60.89 yen from 61.14 yen.
The trade-weighted index fell to 70.91 from 71.34.
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