NZ dollar pares gains on risk aversion; debt firm
Reuters - 2 hours 42 minutes ago
WELLINGTON, Nov 24 - The New Zealand dollar <NZD=> gave back some of it early gains on Monday as caution about high yield currencies and riskier assets reemerged and investors waited for news on measures to prop up troubled U.S. bank Citigroup.
The kiwi, which tumbled 6 percent last week, dipped as stock markets, a barometer of the appetite for risk, gave back early gains and the yen rose on demand for a safe haven.
"Over the coming week, the outlook for global growth will remain the key influence on the NZ dollar," said BNZ currency strategist Danica Hampton.
"A sustained recovery in global equities and risk appetite has the potential to squeeze the NZ dollar back up towards 56 U.S. cents," Hampton said, adding that rate cuts and ailing economy would limit any bounces.
At 0400 GMT, the kiwi was at $0.5314/24 compared with $0.5280/90 in late local trade on Friday. It had ranged between $0.5289 and $0.5397 during Monday's local session.
The yen benefited from renewed caution about financial markets amid reports that a deal between the U.S. government and Citigroup <C.N> was being finalised, which would allow the embattled group to warehouse bad debts [ID:nN23478485].
High yield currencies such as the kiwi and the Aussie fell against the yen <NZDJPY=R> as enthusiasm for risk faded. However, trade was thinned by Japanese markets being closed for a public holiday.
The local business calendar this week sees October trade data and the National Bank of New Zealand's latest business sentiment survey.
A Reuters poll forecasts a large monthly trade deficit of NZ$955 million , with the annual deficit widening to around NZ$5.2 billion from NZ$5 billion in the year through September.
The poll also showed five of 16 forecasters expect the Reserve Bank of New Zealand to cut its official cash rate by 150 basis points to 5.25 percent, with nine expecting a 100 basis point reduction. See [nWEL395134].
Other data to be released this week includes the RBNZ and Marketscope surveys of sentiment, and October building consents.
New Zealand bonds gained for a sixth straight day. The yield on the benchmark 10-year bond <NZ10YT=RR>, which moves inversely to its price, was 4 basis points lower at 5.37 percent.
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