NZ dollar holds below 76 US cts as Eurozone fears linger

NZ dollar holds below 76 US cts as Eurozone fears linger

by Paul McBeth

Jan. 7 (BusinessDesk) – The New Zealand dollar held below 76 U.S. cents as Europe’s sovereign debt woes kept investors nervous about seeking bigger returns, ahead of American employment data out on Friday in the U.S.

The yield on Spanish and Portuguese 10-year bonds widened its spread above German bunds by 20 basis points as the region’s debt problems keep investors on their toes.

Though China pledged to buy 6 billion euros of Spanish bonds, the short maturity profile for some of the so-called PIGS (Portugal, Ireland, Greece and Spain) is keeping debt at the front of investors’ minds.

That comes ahead of U.S. non-farm payrolls data, which is expected to show the world’s biggest economy added between 150,000 and 180,000 jobs last month.

“This year is going to be a year where there’s a lot of funding to be done by the likes of Portugal, Ireland and Spain, and the market is not 100% confident there will be diverse buyers of the sovereign offerings,” said Alex Sinton, senior dealer at ANZ New Zealand. “The kiwi had a move up last week of 4.5%, and this week has probably had a reasonable-sized correction.”

The kiwi rose to 75.83 U.S. cents from 75.69 cents yesterday, and climbed to 58.25 euro cents from 57.59 cents. It increased to 68.75 on the trade-weighted index of major trading partners’ currencies from 68.42 yesterday, and gained to 76.09 Australian cents from 75.83 cents.

It advanced to 63.11 yen from 62.95 yen yesterday, and was up to 48.98 pence from 48.78 pence.

Sinton said the currency may trade between 75.41 U.S. cents and 76.01 cents today with little on the horizon until the non-farm payrolls data.

Brazil introduced a new set of currency controls yesterday as it tries to rein in gains in the real, which strengthened 4.6% last year and recently traded at 1.6851 per U.S. dollar.

The South American nation’s central bank said it will impose new reserve requirements on banks holding short greenback-real positions, which has the potential to reduce the bets by US$6.8 billion to US$10 billion. The kiwi was little changed at 1.2765 real from 1.2768 yesterday.

(BusinessDesk) 09:24:50

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