New Zealand Dollar Drops After 4 Month High

01 February 2012 - Which Way to Pay

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New Zealand Dollar Drops After 4 Month High

The New Zealand Dollar has weakened after a 4 ˝ month high against US dollar but the kiwi dollar achieves new highs against the Euro.

The New Zealand dollar slipped from its 4 and a half month high versus the greenback. This decline was amid speculation that weaker than expected U.S. data will point to a slowing recovery in the world’s largest economy, reducing demand for higher-yielding assets. Optimism was reduced as the American data showed poor consumer and business confidence (Consumer confidence fell 61.1 in January from 64.8 last month and the Institute for Supply Management-Chicago business barometer expanded at a slower than expected 60.2 from 62.2 in December.) Chris Weston, IG markets strategist, said,  “We are seeing risk currencies run into a brick wall. They reason why we are starting to see headwinds is because of the US data.”The Kiwi dollar and Australian currency weakened against almost all of their 16 major counterparts as Asian stocks extended losses. Mike Jones, currency strategist at the Bank of New Zealand, said, “We’ve had quite a strong run from U.S. out of late, but there are a few straws in the wind that suggest momentum is cooling. It’s perhaps just another headwind for the likes of the kiwi and the Aussie if we do see more of a safe haven bid underpin the U.S. dollar.”

However, the Kiwi dollar rose to a new high against the euro, rising as high as 63.20 euro cents which is the highest since the currency was introduced in 2002. It also experienced some highs after a report in China, New Zealand’s second largest export market, showed its manufacturing industry unexpectedly expanded last month. According to a report from China’s statistics bureau and logistics federation, the country’s manufacturing industry purchasing managers index climbed 50.5 in January.

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Related Links:
• ISM Chicago
Institute for supply management
• Reserve Bank of New Zealand
New Zealand's central bank
• Currency Charts

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