NZ dollar gains on strong Clinton showing in US debate

Tuesday 27th September 2016

The New Zealand dollar gained as a strong performance by Democratic candidate Hillary Clinton in the first US presidential debate stoked investors' appetite for risk-sensitive assets.

The kiwi rose to 72.90 US cents at 5pm in Wellington from 72.68 cents at 8am and 72.39 cents yesterday. The trade-weighted index increased to 77.26 from 76.93 yesterday.

Clinton kept her Republican rival Donald Trump on the defensive in their first head-to-head debate in the lead-up to the Nov. 8 election, calming investors who have been nervous about recent polling that has the candidates neck-and-neck. The yen weakened to 100.78 per US dollar from 100.27 at the start of the debate as investors sold the currency, which is typically held as a safe-haven asset.

"The focus today has been the US presidential debate and it appears the market seems to be a little bit happier post the debate," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington. "People were selling the yen and buying risk currencies - the kiwi, Aussie and Canadian dollars."

New Zealand's relatively strong economy and high interest rates have supported demand for the kiwi dollar, despite the fact the Reserve Bank plans to cut the official cash rate later this year.

Ive said the local currency may be going through a period of consolidation before testing the downside again, with global factors driving investors this week.

New Zealand's two-year swap rate increased one basis point to 1.98 percent, and 10-year swaps decreased one basis point to 2.45 percent.

The kiwi gained to 95.10 Australian cents from 94.94 cents yesterday ahead of Reserve Bank of Australia assistant governor Malcolm Edey's speech at the Australian Financial Review retail summit in Melbourne tomorrow.

The local currency rose to 4.8627 Chinese yuan from 4.8263 yuan yesterday and climbed to 73.45 yen from 73.01 yen. It increased to 64.84 euro cents from 64.44 cents yesterday and gained to 56.14 British pence from 55.75 pence.

BusinessDesk.co.nz

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