NZ dollar may face volatility as investors eye escalating violence in Iraq

Monday 16th June 2014

The New Zealand dollar could decline amid volatile trading on investor concern about escalating violence in Iraq.

The kiwi was little changed at 86.68 US cents at 8am in Wellington from 86.61 cents at the New York close and 86.66 cents at 5pm in Wellington on Friday. The trade-weighted index edged up to 80.79 from 80.68 on Friday.

Brent crude oil rose to its highest in nine months on Friday as violence spread in Iraq where Prime Minister Nouri al-Maliki is seeking to regain territory held by the breakaway al-Qaeda group, the Islamic State in Iraq and the Levant, known as ISIL, whose advance put in doubt al-Maliki’s rule over a unified Iraq. The conflict threatens output in OPEC’s second-biggest crude producer. The US has dispatched an aircraft carrier to the Persian Gulf as President Barack Obama weighs options to help Maliki repel ISIL attacks.

"We are in for a rough few days with the Iraqi situation," said Martin Rudings, senior advisor at OMF. "It's a quiet start but people will be looking at the newswires and waiting for any headlines on any skirmishes that start there or any move in by the US. The kiwi is probably vulnerable to some volatility on the downside."

In New Zealand today, the Real Estate Institute is scheduled to publish its latest house price statistics for May and releases are also due on the Performance of Services Index and consumer confidence.

The New Zealand dollar was little changed at 64 euro cents from 63.92 cents on Friday, at 51.04 British pence from 51.09 pence, at 92.21 Australian cents from 91.99 cents and at 88.42 yen from 88.31 yen.

BusinessDesk.co.nz

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