NZ dollar little changed as Greek negotiations keep investors nervous

Monday 13th July 2015

The New Zealand dollar was little changed in local trading as traders are reluctant to take strong positions as Greece's debt woes look set to remain unclear until at least Thursday.

The kiwi traded at 67.31 US cents at 5pm in Wellington, up from 67.01 cents at 8am, and little changed from 67.22 cents on Friday in New York. The trade-weighted index fell to 71.06 from 71.29 last week.

Greece has until Thursday to implement legislative changes allowing new austerity measures before it can start receiving aid, pushing out an earlier deadline from European leaders to have the details of a rescue package wrapped up by Sunday. The continuing stalemate initially sparked a selloff of risk-sensitive assets, though that has since subsided during New Zealand's trading session as investors shy away from making a call one way or the other ahead of the new deadline.

"Anything still could happen - we could seen Greece miraculously getting everybody back home to agree to all the demands, then you're fine, or there could be more watering down of the initial list of demands," said Imre Speizer, senior market strategist at Westpac Banking Corp in Auckland. "Markets don't want to push too far away from where they are now, because they might need to drag it back."

Westpac is still downbeat on the long-term prospects for the kiwi and Australian dollars, due to the prospect of higher US interest rates and rate cuts in New Zealand, Speizer said.

New Zealand's two-year swap rate increased to 2.98 percent at 5pm in Wellington from 2.96 percent on Friday, and the 10-year swap rate advanced to 3.86 percent from 3.83 percent.

Speizer said second-quarter inflation data and the latest dairy auction this week will be watched for any signs that the central bank may have to change its interest rate track, while Federal Reserve chair Janet Yellen's testimony to the US House of Representatives will be monitored to gauge the Fed's thinking.

Real Estate Institute figures today showed house prices in the country's biggest city, Auckland, rose at a record 26 percent in the year through June, while government figures showed food prices, which make up about a fifth of the consumers price index, fell 0.1 percent in the year ended June 30.

The local currency fell to 90.43 Australian cents at 5pm in Wellington from 90.71 cents on Friday in New York, and edged up to 4.1779 Chinese yuan from 4.1779 yuan. It advanced to 60.45 euro cents from 60.20 cents last week, and increased to 43.42 British pence from 43.29 pence. The kiwi was almost unchanged at 82.53 yen from 82.51 yen last Friday.

BusinessDesk.co.nz

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