RTTN: NZ Dollar Drops From Fresh 4-year High Against Yen
The New Zealand dollar was the clear underperformer among the resource-linked currencies in early deals on Friday. The weakening trend for the kiwi was in contrast to its Asian session rally following a report showed that China's manufacturing sector picked up in December.
The HSBC flash purchasing managers' index rose to a 14-month high of 50.9, marking its fifth straight monthly gain. The purchasing managers' index, which is based on responses from 85 percent to 90 percent of those surveyed by HSBC, improved slightly from a final figure of 50.5 for November and significantly above the 49.5 recorded in October.
High-yield currency gains were capped on worries over the progress of U.S. budget talks. Traders also trimmed positions in riskier assets on caution ahead of Sunday's Lower House Election in Japan, although the expected outcome of the election ultimately lead additional BoJ easing, which is considered 'risk-friendly'.
Some positive news out of Europe yesterday increased bets on high-yielding assets in the Asian trading as the eurozone approved the next tranche of loans to Greece and the political agreement on a Eurozone banking union reached.
The Fitch Ratings affirmed France's triple-A rating citing its stable political and social institutions and an exceptional financing flexibility. The rating agency on Friday, however, maintained negative outlook.
The Eurozone private sector contracted at a slower pace as Germany recovered at the end of the year, survey results from Markit Economics showed today.
The composite Purchasing Managers' Index rose to a nine-month high of 47.3 in December, from 46.5 in November. However, a reading below 50 suggests contraction.
The Japanese yen slid in the early Asian session after the Tankan survey indicated a sharp drop in Japanese business confidence in the fourth quarter.
The New Zealand dollar reached as low as 70.39 against the yen before leveling off around 6:05 am ET. This was down almost 0.8 percent from Asian session's fresh 4-year high of 70.96.
The kiwi fell to a weekly low of 1.5586 against the euro around 6:25 am ET. On the downside, the NZ dollar may find support around the 1.56 level.
The New Zealand currency also slipped to 2-day lows of 0.84 against the US dollar and 1.2533 against the Australian dollar around 7:45 am ET. If the kiwi extends downtrend, likely support levels are seen at 1.2550 against the aussie and 0.8390 against the greenback.
Looking ahead, the U.S. consumer price index and industrial production data are expected to influence the market in the upcoming North American session.
