NZ dollar holds at 6-week low as election looms, Europe eyed

NZ dollar holds at six-week low as election looms, Europe progress awaited

By Hannah Lynch

Nov. 21 (BusinessDesk) – The New Zealand dollar traded at its lowest level since early October a week out from the election and amid reports the European Central Bank is weighing the risks of becoming lender of last resort for the
debt-ridden region.

The kiwi dollar was at 75.57 US cents at 9am, from 75.52 cents in late New York trading on Friday.

Lack of progress in addressing Europe’s debt crisis has weighed on so-called risk assets including the kiwi dollar. Bloomberg reported the ECB may start talks with the International Monetary Fund about lending funds to the IMF for sovereign bailouts. Meantime, traders are fretting about a looming Nov. 23 deadline for the US Congress’s deficit-reduction ‘super-committee’ which is aiming to avoid some US$1.2 trillion of automatic spending cuts from 2013.

“It’s the same old story, crouch and hold until we see any news out of the US or Europe,” said Stuart Ive, currency strategist at HiFX.

With New Zealanders set to cast their votes on Nov. 26, opinion polls put the incumbent National Party steady at around 50 percent support and Labour on about half that at 26 percent and the Green Party on about 13 percent. That suggests the main uncertainty would be if National doesn’t get an outright majority and has to form a coalition with a smaller party.

“Offshore investors will continue to position themselves for a variety of outcomes, which may result in further moves lower for the NZD,” said Alex Sinton, a trader at ANZ Bank, in a note.

Data out this week includes electronic card spending at 10:45am today.
HiFX’s Ive said traders want to know whether the Rugby World Cup caused a big jump in spending or had a lagged effect on sales.

The kiwi dollar dropped to 75.65 Australian cents from 75.57 cents on Friday, and declined to 57.99 yen from 58.16 yen. It was little changed at 55.92 euro cents and held steady at 47.85 British pence.

The trade weighted index fell to 66.93 from 66.95 on Friday.

(BusinessDesk)

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