NZ Dollar Drops To 1-week Low Against Greenback
The New Zealand dollar lost ground against its major counterparts on Thursday morning in Asia and plunged to multi-week lows against the Australian dollar, 1-week low versus the US dollar and a 3-day low against the Japanese yen.
The New Zealand share market opened slightly higher today, following a positive overnight lead from the Wall Street where major U.S. averages closed moderately higher on encouraging economic news.
The benchmark NZX 50 index was up by 8.63 points or 0.31% to 2,789.00 shortly after the market opened for the day, while the broader NZX All Capital index added 3.34 points or 0.12% to 2,847.24.
Extending its 2-day losing streak, the New Zealand dollar dropped to a 3-day low of 61.64 against the Japanese currency in early Asian deals on Thursday. The kiwi-yen pair then gained few pips and is presently quoted at 61.76. At Wednesday’s North American close, the kiwi-yen pair was worth 61.84.
The Bank of Japan said today that the monetary base in Japan expanded by 6.4 percent on year in June to 93.639 trillion yen. That follows a 7.9 percent gain in May and an 8.2 percent increase in April. For the second quarter, the monetary base was up 7.5 percent on year.
Current account balances were up 56.9 percent on year, including a 54.5 percent jump in reserve balances. The seasonally adjusted monetary base fell an annual 8.8 percent to 94.448 trillion yen.
Against the Australian dollar, the New Zealand currency slumped to a 17-day low of 1.2667 by 5:00 pm ET and the pair is presently trading at 1.2626. The kiwi, however, began trending higher after the Australian government report revealed that Australia’s trade deficit widened in May. The aussie-kiwi pair closed Wednesday’s New York trading at 1.2658.
Australia posted a seasonally adjusted trade deficit of A$556 million in May, double the previous month’s trade shortfall. The Australian Bureau of Statistics reported today that the May trade deficit was an increase of A$274 million, or 97 percent, over the revised figure for April.
Exports for the month declined 5 percent or A$1.112 billion to A$20.39 billion in seasonally adjusted terms, while imports of goods and services declined by 4 percent or A$838 million to A$20.95 billion.
The New Zealand dollar plunged to a weekly low of 0.6385 against the US dollar around 9:30 pm ET. The next downside target for the kiwi-buck pair is seen at the 0.628 level. The pair is presently worth near Wednesday’s New York session closing value of 0.6396.
The dollar declined yesterday after the Automatic Data Processing, Inc. said in a report that non-farm private employment fell by 473,000 jobs in June following a revised decrease of 485,000 jobs in May. Economists had expected a decrease of 394,000 jobs compared to the loss of 532,000 jobs originally reported for the previous month.
Against the European common currency, the New Zealand dollar saw choppy trading in early Asian trading. The euro-kiwi pair traded in a range between 2.2165 and 2.2055. At 11:00 pm ET, the pair was quoted at 2.2098, compared to yesterday’s close of 2.2134.
Market players are keenly looking for the European Central Bank’s latest interest rate decision today. The benchmark interest rate is already at an all time low of 1 percent.
In June, the ECB decided to keep its interest rate on the main refinancing operations at 1 percent after slashing the rate by a quarter point from 1.25 percent in May.
Before the ECB rate announcement, traders are likely to focus their attention on the euro-zone unemployment and producer price index reports-both for the month of May. Unemployment is expected to rise 9.4 percent in the month, whereas PPI is expected to have risen by 0.1 percent in May.
Turning to the US, the unemployment rate for June, weekly jobless claims report for the week ended June 27 and the factory orders data for May are due out in the New York session.
