Kiwi on back foot against US dollar but up on Aussie

The New Zealand dollar is headed for a weekly decline of 2 per cent against a resurgent greenback and gained versus the Aussie after a court ruling disqualifying an MP with dual citizenship from office in the Australian Government.

The kiwi was trading at US68.40c at 5pm yesterday versus US68.36c as at 8:30am and US68.88c late on Thursday. It traded at US69.68c last Friday in New York. It was at A89.58c from A89.33c late on Thursday.

Australia’s constitution prohibits dual citizens from standing for office. Four other politicians were also invalidly elected last July, according to the ruling. Deputy Prime Minister Barnaby Joyce’s invalid election means the Government no longer has a one-seat majority. “It’s been negative for the Australian dollar,” said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

Joyce, however, has renounced his Kiwi citizenship and could run again in a byelection.

Outside of the Australian news the kiwi had been heavy all day long, it had not bounced at all, said Kelleher. “If we can’t hold US68c, it looks pretty ugly,” he said.

Looking ahead, he said markets will be watching for an announcement on the new chair of the US Federal Reserve chair, something that could happen this weekend.

The kiwi traded at 58.76 euro cents from 58.24 cents, benefiting from euro weakness after the European Central Bank said it would cut bond purchases as expected but otherwise kept its dovish tone.

The trade-weighted index was at 72.80 from 72.88 on Thursday and the kiwi traded at 4.5471 yuan from 4.5671 yuan. It traded at 52.06 British pence from 51.91 pence and 78.01 yen from 78.19 yen.

New Zealand’s two-year swap rate was unchanged at 2.16 per cent and 10-year swaps rose 2 basis points to 3.24 per cent.