NZ dollar holds near 4-month low after Greek coalition talks fail

Thursday 10th May 2012

The New Zealand dollar held near a four-month low as Greek politicians struggled to form a new government, heightening speculation the nation may leave the euro and sapping risk appetite.

The New Zealand dollar traded at 78.46 US cents just before 8am, little changed from 78.43 cents yesterday at 5pm. The trade weighted index rose to 70.5 from 70.45.

Political turmoil in Greece looks set to enter a fourth day, with coalition talks in deadlock, raising the possibility of a second election next month. Both the New Democracy party and the second-ranked Syriza party have failed to form alliances.

The European Financial Stability Facility, anxious to keep the Greeks on track, has confirmed the release of 5.2 billion euros from its first installment of 39.4 billion euros ear-marked for the nation at the end of June.

"If you weigh it all up and we have a day of consolidation - there could be a squeeze up towards the end of the week," said Alex Sinton, senior dealer at ANZ New Zealand. "Relatively speaking the kiwi isn't that bad."

"Unless the Greeks accept the reality that they have to make some structural changes it's difficult to see someone coming to bail them out," Sinton said.

It's a data heavy end to the week in China, New Zealand’s second-biggest export market, with the country’s trade balance due out today, followed by retail and production sales and the consumer price index on Friday.

In the US, the world's largest economy, Federal Reserve Chairman Ben Bernanke will speak at an annual conference on banking structure and competition on Thursday.

Corporate earnings also continue in America with about 70 percent of companies on the Standard & Poor's 500 index topping projections since the start of earnings season, according to Bloomberg.

New Zealand's ANZ-Roy Morgan Consumer Confidence survey and the Bank of New Zealand’s Performance of Manufacturing Index are scheduled for release on today. The accommodation survey for March will also be release by Statistics New Zealand this morning.

The New Zealand dollar slipped to 48.57 British pence from 48.61 pence yesterday and dropped to 62.44 yen from 62.56. It climbed to 60.57 euro cents from 60.47. The kiwi was little changed on 77.96 Australian cents from 78.01.

BusinessDesk.co.nz

Comments from our readers

No comments yet