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NZ dollar drops as higher oil inventories stoke global growth concerns

Thursday 14th January 2016

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The New Zealand dollar fell as investors shed commodity-linked currencies on concern about the outlook for global growth after oil inventories rose.

The kiwi dropped to 65.22 US cents at 8am in Wellington, from 65.61 cents at 5pm yesterday. The trade-weighted index slid to 72.02 from 72.28 yesterday.

Investors exited commodity-linked currencies after an Energy Information Administration report showed a large build-up in US gasoline and diesel inventories, stoking concerns about stagnating demand and slower global growth. The data showed that while crude inventories rose less than expected, gasoline inventories jumped, showing the build-up of stocks is shifting from crude oil to refined fuel products. 

That weighed on Wall Street and bolstered US Treasuries. The Dow Jones Industrial Average dropped 2.3 percent, the Nasdaq Composite Index shed 3.6 percent and the Standard & Poor’s 500 Index was down 1.8 percent.

"Oil is going into negative territory and I think we will see that accelerate," said Stuart Ive, senior dealer, foreign exchange, at OMF. "That will just add fuel to the fire to sell off the commodity currencies. The sell-off in the latter part of the US session has really put the pressure on the kiwi."

In New Zealand today, electronic card transaction data for December is scheduled for release at 10.45am.

The New Zealand dollar gained to 93.65 Australian cents from 93.32 cents yesterday, ahead of Australian December employment data, which is expected to be weaker.

The local currency fell to 60.06 euro cents from 60.60 cents yesterday, dropped to 45.16 British pence from 45.39 pence, declined to 76.87 yen from 77.56 yen, and slipped to 4.3081 yuan from 4.3192 yuan.

BusinessDesk.co.nz

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