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NZ dollar holds below 83 US cts on Italian poll uncertainty
Posted By admin On February 27, 2013 @ 5:20 pm In Article | Comments Disabled
Article – BusinessDesk
Feb. 27 (BusinessDesk) – The New Zealand dollar held below 83 US cents in local trading as the uncertain election outcome in Italy dented investors’ appetite for riskier, or higher-yielding, assets, and trumped an unchanged outlook for this season’s payout …
By Paul McBeth
Feb. 27 (BusinessDesk) – The New Zealand dollar held below 83 US cents in local trading as the uncertain election outcome in Italy dented investors’ appetite for riskier, or higher-yielding, assets, and trumped an unchanged outlook for this season’s payout to dairy farmers.
The kiwi traded at 82.43 US cents at 5pm in Wellington from 82.54 cents at 8am, down from 83.39 cents yesterday. The trade-weighted index fell to 75.49 from 76.28 yesterday.
The prospect of a stalemate after Italy’s first general election since the global financial crisis has spooked investors, reigniting fears Europe’s fourth biggest economy won’t continue a drive for austerity, and that will seep into rest of the region.
Election results in Italy showed Pier Luigi Bersani, who supports the cost cutting programme, won the lower house by less than half a percentage point, while former Prime Minister Silvio Berlusconi secured a blocking vote in the Senate.
“That’s going to hang over market sentiment as people fret about whether Italy can potentially be stable or if it’s a big risk to Europe,” said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. “It’s not going to have a direct impact on the New Zealand dollar, more through the confidence channel.”
The downbeat tone overshadowed Fonterra Cooperative Group affirming an expected farm-gate payment of $5.50 per kilogram of milk solids, and government figures showing a slightly bigger trade deficit than predicted last month.
The Fonterra announcement and trade figures “were a bit of a yawnfest with the focus still on Italy,” Tennent-Brown said.
Northern Hemisphere investors will continue to look for any clues on whether Italy can make its election result work, or if it will call another election, and watch the second day of testimony by Federal Reserve chairman Ben Bernanke to policymakers in the US.
The kiwi fell to 63.10 euro cents from 63.84 cents yesterday and declined to 54.56 British pence from 54.78 pence. The local currency dropped to 80.62 Australian cents from 81.16 cents and fell to 75.75 yen from 76.83 yen.
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