JASON KRUPP Last updated 08:35 07/02/2012
The New Zealand dollar's recent spate of gains against the greenback appeared to sputter overnight, as investors trimmed their holding in risk assets after Greek politicians failed to pass the latest round of austerity measures.
The kiwi recently traded at US83.29 cents, up from US83.16c at 5pm yesterday. On the Trade Weighted Index of major trading partners' currencies it rose to 73.31 from 72.93 on Friday.
Investors appeared to take their foot off the gas overnight as a fresh political stalemate in Greece saw officials fail to pass a new cost cutting measures needed to secure additional bailout funds, heightening fears the country is headed for a disorderly default.
According to a Reuters report, a European Commission spokesman said the deadlock comes after Greece had already exceeded a deadline for finalising talks on the second financing package.
Completing the trifecta, the heavily indebted country and its private sector credits failed to reach an agreement on the level of writedowns to Greek government bonds, despite assurances last week that the talks were in the final stages.
On Wall Street, the Standard & Poor's 500 Index snapped five days of gains to recently trade 0.3 per cent lower at 1340.93, while Europe's Stoxx 600 Index closed 0.1 per cent down at 264.27.
"If you squint through the volatility the kiwi has gone sideways for the last three or four trading sessions, which perhaps it's a sign that the uptrend is running out of stream," said Mike Jones, a currency strategist at Bank of New Zealand.
"Euro sentiment is going to suffer and I see it heading to its long run equilibrium level, and the kiwi may get dragged lower in the risk-off melee."
The Reserve Bank of Australia's cash rate announcement could be a major driver of the kiwi/Australian dollar cross today, with about three quarters of the market expecting the bank to cut interest rates by 25 basis points. Any disappointments see could the Aussie gain strongly against the kiwi, according to Jones.
On the crosses, the kiwi recently traded at 77.65 Australian cents, up from A77.55c yesterday, and it was little changed at 63.70 yen from 63.72 yen. It recently traded at 63.50 euro cents, barely changed from 63.49 euro cents previously, and slipped to 52.65 pence from 52.69 pence at 5pm.
The kiwi may trade between a range of US83c and US83.80c, Jones said.
http://www.stuff.co.nz/business/market-data/currencies/6374695/NZ-dollar-trades-sideways-on-Greek-fears
