Nov. 8 (BusinessDesk) – The New Zealand dollar advanced against the euro after the European Commission slashed its growth forecasts and retail sales across the region fell. The kiwi gave up its gains against the greenback as stocks tumbled.
The currency traded at 82.57 US cents from 82.54 cents at 5pm in Wellington yesterday. It rose above 83 cents overnight. The kiwi rose to 64.66 euro cents from 64.31 cents.
The European Commission slashed its forecast for growth in the 17-nation economy to just 0.1 percent in 2013, from a May prediction of 1 percent, while trimming its forecast for Germany to 0.8 percent from 1.7 percent. Retail sales in the euro region fell a greater-than-expected 0.2 percent in September.
The kiwi dollar initially rose as US president Barack Obama won a second term in office though concern at the so-called fiscal cliff of tax increases and spending cuts eroded optimism and the Dow Jones Industrial Average fell 2 percent..
“Protracted uncertainty will likely negatively impact risk appetite, potentially undermining demand for the NZD/USD,” said Kymberly Martin, market strategist at Bank of New Zealand. “Rating agencies have been quick to reiterate that unless the US comes up with a credible long-term debt reduction plan the sovereign’s rating will slip.”
Traders are awaiting the release today of the household labour force survey, which is expected to show the jobless rate eased to 6.7 percent from 6.8 percent while jobs growth sped to 0.3 percent.
The trade-weighted index rose to 73.92 from 73.77 and the kiwi gained to 79.29 Australian cents from 79.07 cents.
The New Zealand dollar rose to 51.65 British pence from 51.55 pence and fell to 65.97 yen from 66.17 yen.