Kiwi volatile on election nerves

The New Zealand dollar slipped 0.5 per cent against the greenback over the week after varied results from different political polls ahead of the September 23 election, although global jitters kept it range bound yesterday.

The kiwi traded at US72.34c at 5pm yesterday versus US72.11c at 8am and from US72.54c late on Thursday. It traded at US72.66c last Friday in New York. The tradeweighted index was at 75.39 from 75.57 on Thursday.

The local currency got a solid lift early in the week when a Newshub Reid Research poll showed the incumbent National Party ahead. However, it fell on Thursday when the latest 1News Colmar Brunton poll reversed those positions with the opposition Labour Party leading.

“We are seeing volatility pick up ahead of the election and it will continue to do so,” said Sheldon Slabbert, a trader at CMC Markets. However, “the broader [ global] economic issues, no matter who takes the reins, are going to overshadow,” in particular as there are signs that things are not going that well for China, he said, noting that inflation is also picking up in the US, where CPI data yesterday was slightly ahead of expectations.

Gains in the kiwi dollar were also capped by global nervousness after North Korea fired another missile over Japan into the Pacific Ocean yesterday, in what Slabbert described as a fairly mild market reaction.

Next week, domestic balance of payments and GDP data will be in focus.

The kiwi was trading at 53.97 British pence from 54.87 pence late on Thursday after the Bank of England said it may hike interest rates in coming months. It was at 90.50 Australian cents from A90.53c on Thursday. The kiwi dropped to 60.73 euro cents from € 61c.

The two- year swap rate rose 1 basis point to 2.19 per cent while 10- year swaps rose 2 basis points to 3.17 per cent.