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Kiwi down as election race tightens

NZ Newswire logoNZ Newswire 10/09/2017

The New Zealand dollar has fallen from a month-high with no clear favourite for the upcoming general election and a drop in commodity prices in New York.

The kiwi was trading at US72.66 cents as at 8.30am on Monday in Wellington, little changed from Friday in New York and down from US73.21c in Wellington at the end of last week. The trade-weighted index fell to 75.34 from 75.59.

An NZ Herald election forecast, taking in the latest opinion polls, has projected 54 seats for Labour and 48 for National, continuing the turnaround for Labour since Jacinda Adern took over as leader.

While financial markets aren't fazed by the election outcome, the uncertainty may cap any gains in the run-up to the September 23 vote, analysts said. Meanwhile, the CRB Index of 19 commonly traded commodities fell 0.9 per cent on Friday.

"Locally, general election jitters will continue, and combined with further softening in house prices and dairy future prices, will cap NZD," said ANZ Bank rural economist Con Williams.

"Sentiment toward the USD remains downbeat, and geopolitical and political news will continue to drive movements."

On Monday, traders will be watching for retail spending on electronic cards for August.

Traders will also be watching for any further impact on the yuan after the People's Bank of China said it would remove a 20 per cent foreign exchange margin for financial institutions buying US dollars, a move that may signal discomfort with the strong Chinese currency against the greenback which hurts exporters.

On Monday morning, the kiwi dollar traded at 4.7064 yuan from 4.7045 yuan in New York and down from 4.7221 yuan in Wellington at the end of last week. It traded at 90.05 Australian cents from A90.11c in New York and gained to 78.68 yen from 78.32 yen. It was at 55.10 British pence from 55.02p and rose to 60.48 euro cents from 60.34c.

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