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NZ dollar regains some ground vs greenback

Monday 8th August 2011

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The New Zealand dollar's level against the greenback has so far shown little reaction to the move by ratings agency Standard & Poor's to lower the United States' credit rating.

In a bumpy night's trading, the kiwi moved from US83.72c at 5pm on Friday to around US84.30c by 9am on Saturday. By 8am today it was buying US84.22c, after the downgrade at lunchtime on Saturday (NZT).

The US dollar is expected to take a further beating against the Swiss franc and Japanese yen after the US lost the top-tier credit rating from S&P.

Losses against the euro, however, could be tempered by the euro zone's escalating debt crisis as officials there discuss ways to reduce borrowing costs for large euro zone economies Spain and Italy.

The NZ dollar did fall to 0.5843 euro at 8am today, its lowest level in nearly four weeks, from 0.5930 at 5pm on Friday.

It was also down to 65.62 yen at 8am from 65.81, but climbed to A80.70c against the Australian dollar from A79.94c at 5pm on Friday. The trade weighted index was down to 72.46 at 8am today from 72.63 at 5pm on Friday.

ANZ said the end of last week had been "extremely turbulent" for the NZ dollar as it recovered from session lows with slightly positive jobs data from the US.

Westpac senior market strategist Imre Speizer said the US downgrade should pressure the US dollar lower today, but any adverse reaction from global equity markets would be negative for the NZ and Australian dollars.



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