NZ and Australian dollars trading flatly against major currencies

Following the New Year boost to the respective strength of the New Zealand and Australian dollars, they are now trading flatly against the world's major currencies as the United States addresses its looming debt ceiling crisis.

The transtasman currencies gained about US1c after Congress voted down controversial ''fiscal cliff'' tax hikes on January 1, but since then the currencies have been trading flat or slightly down, BNZ currency strategist Mike Jones said when contacted.

''The fiscal cliff jitters were assuaged with the deal on January 1, with a wave of relief for the markets,'' he said.

That relief also carried the New Zealand and Australian dollars and they ''screamed higher'' in strength by around US1c, Mr Jones said.

Other analysts predict the kiwi could trade up to 84.7c this week, following rising equity markets and Chinese commodity demand, BusinessDesk reported yesterday.

Market scrutiny appears set to swing from the US to Europe for the rest of the week, with the key economic event being a European Central Bank meeting on Thursday, almost totally focused on how far policymakers will go to boost growth, Reuters reported.

Although there are some signs that a bottom may have been reached in the eurozone's recent economic decline, the pattern of moderate US and Asian growth book-ending feeble Europe was firmly in place for the moment, Reuters said.

Yesterday, the kiwi was up slightly against the US at 83.05, and was unchanged against the euro and Chinese yuan at respectively 63.51c and 5.2, while the Australian dollar was flat against the greenback at 104.75 and down slightly against the euro and yuan, at respectively 80.0 and 6.5.

A year ago, the kiwi hit a then high against the euro, at 61.75c, sparking concerns at the time for exporters.

Mr Jones said following the ''initial optimism'' from January 1, the markets and investors ''had taken a reality check and the [transtasman] currencies had drifted sideways''.

The ''key news'' being awaited now was a combination of the US allowing itself to borrow beyond its almost $US17 billion debt ceiling, and more fiscal cliff decisions in the months ahead, he said.

Mr Jones noted that only part of the US ''fiscal cliff'' issue had been addressed, as decisions on wide-ranging cuts to US public spending had only been postponed until March.

The economies of the US, China and much of the developing world have decoupled from Europe, leaving it to wallow in various stages of recession and fiscal disarray, Reuters said.

Manufacturing surveys published just a few days into 2013 laid out the divide starkly.

The US and China both came in above the 50 index level, which designates growth, while the eurozone languished in recessionary territory for the 17th month in a row.

The Australian dollar yesterday was a third of a US cent higher after encouraging jobs data from the United States pushed world markets higher. Yesterday morning, the Australian dollar was trading at 104.72USc, up from 104.43 on Friday.

Westpac New Zealand senior market strategist Imre Speizer told AAP the currency moved higher on Friday night, following the release of US non-farm payrolls figures. The figures showed 155,000 jobs were added to the US economy in December and the unemployment rate was steady at 7.8%.

But Mr Speizer said concerns about an upcoming political fight in the US over the country's debt ceiling and speculation the Federal Reserve might end its stimulus programme sooner than expected could weigh on the Australian dollar.

ODT/directory - Local Businesses

CompanyLocationBusiness Type
Mayfair Costume HireDunedinEntertainment Equipment
Cruize MilfordQueenstownSightseeing
Lakes Leisure LtdQueenstown
Goosetree Web DesignDunedinWeb Design & Development