WSJ:NZ Dollar Down Late As Global Risk Aversion Weighs; Bonds Rise
Late Change
NZD/USD 0.8622 -0.0151
NZD/AUD 0.8014 -0.0018
NZD/JPY 66.605 -1.34
April 2013 Bond 3.24% -13.0 bps
May 2021 Bond 4.75% -15.0 bps
10-Year U.S. Spread +215 bps -1.0 bp
90-Day Bank Bill 2.97% +4.0 bps
WELLINGTON (Dow Jones)--The New Zealand dollar was trading sharply lower late Wednesday as global risk aversion weighed on the currency.
"Really negative investor sentiment has dominated global markets in the last 24-36 hours and with U.S. stocks closing down well over 2.0% and the S&P 500 closing well below that 200-day moving average, Asia got off to a pretty rocky start," said RBC Capital Markets currency strategist Sue Trinh.
Trinh added that the New Zealand dollar wasn't helped by softer-than-expected Australian retail sales figures.
The Australian Bureau of Statistics said June retail sales fell 0.1% from the month before to a seasonally adjusted A$20.54 billion, though that figure was higher than A$20.26 billion a year earlier.
Trinh said that in light of concerns about a slowing in the global economy the focus will now be on the U.S. Institute for Supply Management Non-Manufacturing Survey due out later in the global day.
"Also keep your eyes on U.S. equity markets particularly with U.S. stocks teetering just above the year-to-date lows," she said.
Thursday, the market will be watching for domestic second-quarter employment data due out at 1045 a.m. local time (2245 GMT Wednesday). The median forecast from a Dow Jones Newswire poll of 10 economists projects unemployment to be at 6.7%.
New Zealand government bonds rose sharply while interest rate swaps were lower following offshore moves.
A local bond trader said the moves were partly spurred by Tuesday's rally in Australia after a Reserve Bank of Australia announcement, made after the end of the New Zealand session, that was less hawkish than investors had expected.
"There is obviously a lot going on in the world as well with markets in the U.S. getting toasted," he said.
--By Lucy Craymer, Dow Jones Newswires; 64-4-471-5990; lucy.craymer@dowjones.com
