NZ dollar eases after another Brexit failure

Wednesday 23rd October 2019

The New Zealand dollar eased for technical reasons and because the British parliament bucked Prime Minister Boris Johnson's desire to get his Brexit bill through the House of Commons in three days.

The kiwi was trading at 63.89 US cents at 5pm in Wellington from 64.04 at 8am. The trade-weighted index was at 70.72 points from 70.80.

Earlier, the market had been buoyed by Brexit euphoria "but it fails at the last hurdle, as usual," says Tim Kelleher, head of foreign exchange sales at Commonwealth Bank of Australia.

It had looked like Johnson might get his way and the parliament did back his bill, but then it promptly voted down his timetable, leaving the bill in limbo.

Johnson has already unwillingly requested that the European Union grant Britain another extension beyond Oct. 31, as he was required by law to do, and his aides have said he will now seek a general election.

The kiwi dollar has had "a week of grinding higher and it's run into some pretty heavy resistance" towards 64.50 US cents, Kelleher says. "Boris falling over this morning was the start of it."

After five or six attempts at breaking through 64.50 cents, it's likely to test the downside again, he says.

There's also been little news on the other major geopolitical situation preoccupying the market, the US-China trade war, although there were reports that China has been buying US soya beans as it has promised.

"They were buying Brazilian the day before, so they're certainly shopping around a bit," Kelleher says.

The New Zealand dollar was trading at 93.41 Australian cents from 93.42, at 49.72 British pence from 49.70, at 57.46 euro cents from 57.56, at 69.20 yen from 69.46, and at 4.5267 Chinese yuan from 4.5322.

The two-year swap rate edged down to a bid price of 0.9587 percent from 0.9962 late yesterday. The 10-year swaps fell to 1.3775 percent from 1.4500.

(BusinessDesk)

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