NZ dollar pushed around by electoral polls

The New Zealand dollar slipped 0.5 percent against the greenback over the week after whipsawing on different political polls ahead of the Sept. 23 election, although global jitters kept it range bound today.

The kiwi traded at 72.34 US cents as at 5pm in Wellington versus 72.11 US cents as at 8am and from 72.54 cents late yesterday. It traded at 72.66 US cents last Friday in New York. The trade-weighted index was at 75.39 from 75.57 yesterday.

The local currency got a solid lift early in the week when a Newshub Reid Research poll showed the incumbent National ahead, however it fell on Thursday when the latest 1News Colmar Brunton poll reversed those positions with the opposition Labour Party leading.

"We are seeing volatility pick up ahead of the election and it will continue to do so," said Sheldon Slabbert, a trader at CMC Markets. However, "the broader (global) economic issues, no matter who takes the reins, are going to overshadow," in particular as there are signs that things are not going that well for China, he said, noting that inflation is also picking up in the US, where CPI data overnight was slightly ahead of expectations.

Gains in the kiwi dollar were also capped by global nervousness after North Korea fired another missile over Japan into the Pacific Ocean on Friday, in what Slabbert described as a fairly mild market reaction.

"Some risk was taken out of the market this morning but it has been unwinding in the afternoon. It seems as if cool heads are prevailing for the time being," he said. Investors will be watching to see what the UN Security Council does at its meeting later in the global trading day."

Looking ahead, investors will be keeping a close watch on North Korea. Next week domestic balance of payments and gross domestic product data will be in focus.

The kiwi was trading at 53.97 British pence from 54.87 pence late yesterday after the Bank of England said it may hike interest rates in coming months. It was at 90.50 Australian cents from 90.53 cents yesterday.

The kiwi declined to 79.83 yen from 80.03 yen late yesterday and fell to 4.7386 yuan from 4.7413 yuan. It dropped to 60.73 euro cents from 61 cents.

The two-year swap rate rose 1 basis point to 2.19 percent while 10-year swaps rose 2 basis points to 3.17 percent.

(BusinessDesk)