NZ dollar slips after jumping on Draghi, Chinese rate cut

NZ dollar slips after jumping in New York on Draghi, Chinese rates

By Jonathan Underhill

Nov. 24 (BusinessDesk) - The New Zealand dollar fell from its New York highs at the end of last week, having jumped against the greenback after China unexpectedly cut interest rates and European Central Bank President Mario Draghi pledged to whatever was needed to underpin the region's economy.

The kiwi traded at 78.76 US cents at 8:30am in Wellington from as high as 79.47 cents in New York on Friday and from 78.81 cents in late Asian trading last week. The trade-weighted index fell to 78.57 from as high as 78.96 in New York trading.

Stock markets rallied and the Australian and New Zealand dollars gained on Friday after China unexpectedly lowered interest rates for the first time since July 2012, while Draghi pledged that policy makers “will do what we must to raise inflation and inflation expectations as fast as possible.” The People’s Bank of China cut its benchmark lending rate by 40 basis points to 5.6 percent in a move that may support demand in the biggest market for Australia and New Zealand.

"The move reflects Chinese policymakers' determination to keep growth above 7 percent year-on-year," said Imre Speizer, strategist at Westpac Banking Corp."Markets reversed soon afterwards without any obvious catalyst."

The kiwi will meet resistance at 79.50 US cents and would find support if it fell as far as 78.40 cents, said Kymberly Martin, senior market strategist at Bank of New Zealand.

In New Zealand this week, traders will be eyeing data on migration on Monday, visitor arrivals on Wednesday, trade on Thursday and building consents and the ANZ business confidence survey on Friday.

The New Zealand dollar traded at 92.83 yen, having reached as high as 93.63 yen on Friday. The kiwi was at 90.82 Australian cents, down from 90.90 cents in New York and 91.23 cents in Wellington. It declined to 63.67 euro cents from 63.90 cents in New York and was at 50.36 British pence from and was little changed at 50.36 British pence from 50.34 pence.

(BusinessDesk)

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