Kiwi falls vs euro and pound after German data

The New Zealand dollar fell against the euro and the pound as political concerns ebbed in Spain and the UK and figures showed stronger-than-expected German production.

The kiwi traded at 60.14 euro cents as at 8am in Wellington from 60.27 cents late yesterday. It fell to 53.74 British pence from 54.05 pence and was little changed at 70.70 US cents from 70.75 cents.

The euro gained after figures showed German industrial production rose 2.6 percent in August, more than twice expectations of a 0.9 percent gain, while in Spain's Catalonia, pro-unity marchers showed not everyone in the region wants to split. Also helping the euro were comments from European Central Bank board member Sabine Lautenschlaeger that the bank should reduce its asset purchases next year. The pound rose as expectations faded that Prime Minister Theresa May would be toppled.

"The easier political climate in Europe over the weekend contributed to a more positive mood around European assets," Sharon Zollner, senior economist at ANZ Bank New Zealand, said in a note. "Pro-Spanish unity Catalonians marched en masse at the weekend whilst in the UK the reported challenge to UK PM May fizzled out, at least for now."

Trading was relatively subdued with US markets closed for the Columbus Day holiday.

The kiwi dollar jumped almost 3 percent against the Turkish lira, which stood at 2.6323 per kiwi dollar as the Turkish currency and stocks fell in the wake of a spat with the US, with both countries cancelling visa services in a tit-for-tat stoush concerning opponents of Turkish President Recep Tayyip Erdogan.

Locally today, traders will be watching for September electronic cards for the latest update on retail sales, while NZ First leader Winston Peters has set Thursday as the cut off for negotiations on forming the next government.

"Until we get some closure on the local political situation, we suspect the kiwi will continue to trade with a heavy bias," Zollner, said. "And even once the political clouds clear, with the economy starting to show a few late-cycle wobbles and the RBNZ expected to be a reluctant participant in the global removal of monetary policy stimulus, any pop higher is something we would sell into."

The trade-weighted index slipped to 74.78 from 74.86 late yesterday. The kiwi traded at 91.08 Australian cents from 91.01 cents. It traded at 4.6815 yuan from 4.6963 yuan and at 79.63 yen from 79.70 yen.

(BusinessDesk)