NZ dollar holds in recent range ahead of Jackson Hole

Tuesday 28th August 2012

The New Zealand dollar slipped against the greenback, while remaining in its recent trading range, as traders pondered the potential for concrete details of US monetary stimulus to be revealed at the Jackson Hole, Wyoming, central bankers retreat this weekend.

The kiwi dollar fell to 80.81 US cents from 81.05 cents at 5pm in Wellington yesterday. The trade-weighted index fell to 72.74 from 72.86. The local currency has held in a range of about 80.50 cents to 82.20 cents since late July.

Federal Reserve chairman Ben Bernanke heads the speakers' list at Jackson Hole and may amplify on the minutes for the last Federal Open Market Committee minutes, which showed many members favour more stimulus for the US economy. Still, Bloomberg today cited economists saying investors may be disappointed as Bernanke may talk only in broad terms.

"Risk appetite remains fairly robust, but the market is slightly directionless as it awaits Friday's Jackson Hole meeting," said Kymberly Martin, a strategist at Bank of New Zealand. "There is some speculation that Bernanke may disappoint expectations for him to signal new stimulus at the meeting."

The New Zealand dollar fell to 64.66 euro cents from 64.76 cents. After a measure of German business confidence fell less than some economists had feared and German Finance Minister Wolfgang Schaeuble announced that Germany will work with France on proposals for fiscal, banking and monetary union in Europe.

European Central Bank chief Mario Draghi also speaks at Jackson Hole and may elaborate on his determination to resume buying sovereign bonds, a plan opposed by Germany's Bundesbank.

The kiwi fell to 63.65 yen from 63.81 yen and declined to 51.17 British pence from 51.26 pence. The kiwi fell to 77.88 Australian cents from 77.99 cents.

BusinessDesk.co.nz

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