By Paul McBeth
Dec. 19 (BusinessDesk) - The New Zealand dollar fell below 84 US cents as investors flocked the euro and Swiss franc after Standard & Poor's upgraded its Greek credit rating and as optimism was stoked on the prospect US legislators will cut a deal on the fiscal cliff.
The kiwi fell to 83.88 US cents at 5pm in Wellington from 84.15 cents at 8.30am and 84.42 cents yesterday. It dropped to 63.30 euro cents from 64.07 cents yesterday.
The euro rose to seven-month high after rating agency S&P raised Greece's credit rating to B- from selective default, and that ebullience continued on the prospect US policymakers will back a deal to avert US$600 billion in Federal tax hikes and spending cuts. House of Representatives majority leader and Republican Eric Cantor told media he expects Congress will pass a measure to dodge the fiscal cliff at a vote on Thursday.
"While the kiwi and Aussie have a floor under them on the back on the basis that an agreement will support risk they have underperformed," said Sue Trinh, currency strategist at RBC Capital in Hong Kong. "We expect the weakness to be somewhat shallow."
Reserve Bank of Australia governor Glenn Stevens cast a pall over the Australian dollar when he told the Australian Financial Review there might not be an easy handover from mining to other industries as the resources sector slows down, while whole milk powder prices fell for a fourth straight auction at Fonterra Cooperative Group's latest GlobalDairyTrade auction.
New Zealand's currency fell to 79.66 Australian cents from 80.02 cents yesterday.
New Zealand's third-quarter current account gap was $9.89 billion in the year ended Sept. 30, from a deficit of $10.09 billion three months earlier, according to Statistics New Zealand. An annual gap of $9.83 billion was expected, according to a Reuters survey. The annual deficit narrowed to 4.7 percent of gross domestic product from 4.9 percent.
That comes ahead of tomorrow's third-quarter gross domestic product figures, which are expected to show the economy grew 0.4 percent in the period, according to a Reuters survey.
The trade-weighted index fell 74.72 from 75.26 yesterday. The kiwi fell to 51.57 British pence from 52.05 pence yesterday, and dropped to 70.66 yen from 70.93 yen.