NZ dollar falls as JPMorgan report knocks financial stocks on Wall Street

Thursday 3rd December 2009

The New Zealand dollar fell as financial stocks led a decline on Wall Street after a report forecast earnings at investment bank JP Morgan could take a hit on tougher regulation for derivative trading.

The Dow Jones Industrial Average declined 0.2% after an analyst predicted JP Morgan’s revenue could drop by as much as US$3 billion if regulators go ahead with a plan to only allow derivatives trading through formal exchanges. ADP employment figures and Challenger Job Cuts data in the U.S. continued to improve from last month, and suggest Friday’s non-farm payrolls could be better than expected.

“All bank earnings would be affected to some degree” if the U.S. goes ahead with the proposed derivative rules, said Imre Speizer, markets strategist at Westpac Banking Corp. “The kiwi’s fallen in the last four hours following the equity markets, which are a little bit weaker.”

The kiwi dropped to 72.18 U.S. cents from 72.71 cents yesterday, and fell to 64.03 on the trade-weighted index, or TWI, a measure of the currency against a basket of five trading partners, from 64.41. It sank to 63.10 yen from 63.48 yen yesterday and declined to 78.04 Australian cents from 78.47 cents. It decreased to 47.98 euro cents from 48.16 cents yesterday and slipped to 43.33 pence from 43.73 pence.

Speizer said the currency may trade between 72 U.S. cents and 73 cents today, with Australian retail sales data the main for the day. Westpac economists predict consumer spending rose 0.5% last month.

The yen eased a little after Japan’s Prime Minister Yukio Hatoyama said it was unclear if the recent strength in the yen was temporary, and couldn’t be left “as it is,” while the pound was supported after the Bank of England’s chief economist Spenser Dale said the U.K. appears to be emerging from its recession.

Today’s ANZ Commodity Price Index is expected to show further gains in the price of raw materials produced in New Zealand on the back of surging dairy prices, according to Bank of New Zealand strategist Mike Jones.

Businesswire.co.nz

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