WSJ:NZ Dollar Down Late Due To Weak U.S. Data, Debt-Ceiling Vote
Late Change
NZD/USD 0.8773 -0.0053
NZD/AUD 0.8032 +0.0048
NZD/JPY 67.945 -0.63
April 2013 Bond 3.37% -4.0 bps
May 2021 Bond 4.90% -4.0 bps
10-Year U.S. Spread +216 bps +6.0 bps
90-Day Bank Bill 2.93% +1.0 bp
WELLINGTON (Dow Jones)--The New Zealand dollar was trading lower late Tuesday following poor U.S. economic data overnight and a boost for the greenback after the House of Representatives voted to raise the debt ceiling.
The New Zealand dollar fell late in trading Monday after U.S. manufacturing activity plunged to a mid-2009 level.
While the New Zealand second-quarter Labour Cost Index and Quarterly Employment Survey showed wages continued to grow, this was largely ignored by the market, which was also preoccupied by the U.S. debt-ceiling negotiations.
The U.S. House of Representatives passed a deal Monday evening to raise the country's debt ceiling and cut its budget deficit. The passage of the package was positive for the U.S. dollar and this weighed on the Kiwi, ANZ Foreign Exchange Manager Murray Hindley said.
However, the New Zealand dollar did get a bounce against the Aussie following the release of the Reserve Bank of Australia's policy rate decision and accompanying statement, which helped the New Zealand dollar pare back some of the earlier losses against the greenback.
"I think the statement is relatively balanced but the markets have seen yields fall significantly following the statement... The RBA is saying it is more concerned about the global economic outlook, it is saying it thinks monetary conditions have by themselves become tighter... but countering that they have said they are much more concerned about inflation," said RBS currency strategist Greg Gibbs.
Gibbs added there was a propensity for the market to think the worst about the global economy at the moment.
New Zealand government bond prices were higher tracking moves in the Australian market. However, the New Zealand bond market closed prior to the RBA rate decision and statement, so moves were more muted than across the Tasman.
A local bond trader said that offshore moves would give direction Wednesday.
-By Lucy Craymer, Dow Jones Newswires; 64-4-471-5990; lucy.craymer@dowjones.com
