Iron ore price drop lifts NZ dollar
By Tina Morrison
The New Zealand dollar gained as traders exited the Australian dollar in favour of the kiwi on concern a slump in iron ore prices will weigh heavily on the Australian economy.
The kiwi rose to 67.27 US cents at 8am in Wellington, from 66.43 cents at 5pm yesterday. The local currency jumped to 90.69 Australian cents from 89.76 cents. The trade-weighted index advanced to 71.09 from 70.31.
Investors are shedding the Australian currency, which touched a six-year low of 73.68 US cents overnight, as iron ore prices fell below US$50 a ton on concern about increased supply from lower cost producers and weaker demand in China.
That's prompted investors to favour the kiwi over the Aussie, pushing the local currency higher.
"The Australian dollar is among the worst performing major currencies," BNZ currency strategist Raiko Shareef said. "Perhaps the most curious feature of the currency landscape is NZD/USD's punchy gain, despite subdued risk appetite. We suspect this was more driven by investor positioning on NZD/AUD, rather than any broader inclination to bid NZD."
In New Zealand, electronic card spending data for June is scheduled for release.
Elsewhere, Australia publishes employment data for June, while China releases its June inflation data and overnight the Bank of England reviews interest rates.
The New Zealand dollar gained to 43.79 British pence from 43.02 pence, rose to 60.76 euro cents from 60.34 cents, and advanced to 81.14 yen from 81 yen.