Tuesday 13th January 2015 |
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The New Zealand dollar touched a week low against the yen as investors sought safe haven assets and eschewed commodity linked currencies on concern about global growth.
The kiwi touched 91.66 yen, and was trading at 91.94 yen at 8am in Wellington, from 92.89 yen at 5pm yesterday. The local currency dropped to 77.74 US cents from 78.53 cents yesterday.
Commodities fell to a 12 year low on the Bloomberg Commodity Index of 22 energy, agriculture and metal prices, on concern a surplus in oil will continue while slowing economic growth in China and Europe dents demand for raw materials.
"We are on the tail end of a commodity sell off. Commodities are reactive to supply and demand and at the moment we have plenty of supply across the board and the demand is just not picking up the slack," said Stuart Ive, senior dealer, foreign exchange, at OMF. "Oil has continued to get slammed overnight along with most other commodities and that effect has come in and hit the kiwi. Yen is being bought as a risk aversion to trade against everything else that is going on."
OMF's Ive said the next support level for the local currency is 91.56 yen.
"If we break that, the targets on the downside start significantly opening up," he said. "We haven't quite broken down yet but you have got to think that if the commodity market still continues to fall, plus the stock markets also continue to fall, then it's likely that we will see a continuation in this pattern as commodity currencies get sold and yen is being bought as a safe haven."
In Asia today, the focus is on Chinese trade data for December as analysts seek more data on how Asia's largest economy is tracking. China is the largest trading partner for New Zealand and Australia.
The New Zealand dollar was little changed at 95.16 Australian cents from 95.20 cents yesterday ahead of the release of the ANZ Roy Morgan consumer confidence survey.
The local currency weakened to 65.64 euro cents from 66.24 cents yesterday. The euro strengthened after officials said the Greek elections later this month are no obstacle to European Central Bank plans for quantitative easing. However they said the majority of financing needed to go to the private sector, suggesting government bond buying may be limited.
The kiwi fell to 51.19 British pence from 51.78 pence yesterday ahead of UK December inflation data tonight.
The trade-weighted index slipped to 79.21 from 79.77 yesterday.
BusinessDesk.co.nz
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