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Kiwi dips on weaker commodities

NZ Newswire logoNZ Newswire 19/04/2017 Paul McBeth

The New Zealand dollar has fallen as weaker commodity prices sapped demand for currencies linked to primary production and ahead of local figures expected to show consumer prices have risen at their fastest annual pace in more than five years.

The kiwi dropped to US69.99 cents as at 8am on Thursday in Wellington from US70.44c on Wednesday. The trade-weighted index declined to 76.11 from 76.47.

The Thomson Reuters/CoreCommodity CRB index, a broad measure of prices for raw materials, fell 1.4 per cent as weaker prices for oil and iron ore weighed on currencies sensitive to commodity prices including the kiwi, Australian and Canadian dollars.

Investors will be watching first-quarter inflation figures which are expected to show the consumers price index rose at an annual pace of 2 per cent, the fastest annual pace since September 2011.

"Commodity price moves and risk attitudes are likely to be the main driver of the NZD in the near term, with New Zealand's solid growth story hardly new news," ANZ senior economist Sharon Zollner said in a note.

Reserve Bank governor Graeme Wheeler has said he's in no rush to move the official cash rate from its 1.75 per cent level, while acknowledging heightened geopolitical risks could force his hand either way.

The stand-off between the US and North Korea has been weighing on equity markets in recent weeks while the upcoming French election and UK's looming snap election have heightened that uncertainty, stoking demand for safe-haven assets such as gold and Japan's yen.

On Thursday morning, the kiwi dropped to 76.18 yen from 76.49 yen on Wednesday, fell to 65.32 euro cents from 65.69c and declined to 54.75 British pence from 54.90p. It slipped to 93.30 Australian cents from A93.59c and fell to 4.8181 Chinese yuan from 4.8470 yuan.

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