NZ dollar lower on risk aversion; bonds firm
Reuters - Friday, November 7
WELLINGTON, Nov 7 - The New Zealand dollar <NZD=> slipped to its lowest in a week on Friday as risk aversion dominated and New Zealand prepared for a general election.
Weak data and poor corporate earnings from the U.S. saw stock markets take another hit, dragging down riskier assets like the high-yielding kiwi.
New Zealand goes to the polls on Nov. 8, with the centre-right National Party seen most likely to form the next government, ousting the centre-left Labour Party after nine years in power.
Given the uncertain economic times, investors are hoping the election result will not lead to prolonged coalition negotiations, analysts at the ANZ-National Bank said.
"Markets are hoping that a clear decision is delivered by the voting public," the bank said in a note to clients.
For more on the New Zealand election, see: [nWEL376751]
At 0415 GMT the kiwi was at $0.5856/61 compared with $0.5931/41 in late local trade on Thursday.
The Reserve Bank of New Zealand on Friday said it would introduce two more facilities to support financial markets. [nWLF001155]
The euro and sterling were hammered in the wake of twin interest rate cuts from the European Central Bank and the Bank of England, and the prospect of more cuts to follow, while the yen and the dollar gained on heightened global recession fears.
On the local front, next week sees third-quarter retail sales and the housing and manufacturing data.
New Zealand bonds firmed as cash leaving the equity market sought the safe haven of government bonds, and as U.S. Treasuries advanced ahead of expected weak jobs data expected later on Friday.
The yield on the benchmark 10-year bond <NZ10YT=RR>, which moves inversely to prices, closed 6 basis points lower at 5.93 percent.
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