NZ Dollar Extends Slide As New Zealand First Forms Coalition With Labour
October 19 2017 - 2:05AM
RTTF2
The New Zealand dollar continued to be lower against its major
counterparts in early European trading on Thursday, after New
Zealand's third largest political party New Zealand First announced
the formation of a coalition with Labour, with Jacinda Ardern set
to become the Prime Minister.
The leader of the New Zealand First Winston Peters announced his
support behind Labour to form a coalition government, after weeks
of negotiations.
The new coalition will also be supported by the Green Party.
The news sparked growth fears as the new coalition favors
significant cut to immigration quotas and put new controls on
foreign ownership of property.
The currency was also hurt by worries over the constitutional
crisis between Spain and Catalonia after the Spanish government
said it would continue with the procedures set out in Article 155
of the Constitution to restore the legality of self-rule in
Catalonia.
Spain prime minister will convene a special Cabinet meeting
Saturday to trigger process to take control of Catalonia's
powers.
Also in focus is the European Council meeting beginning today,
with Brexit talks to be high on the agenda. Although the U.K. wants
to begin talks about future relations, the EU 27 is insisting
sufficient progress on divorce terms.
The currency has been trading in a negative territory in the
Asian session.
The kiwi declined to more than a 5-week low of 79.15 against the
yen, off early more than 2-week high of 80.95. The kiwi is seen
finding support around the 78.00 mark.
Data from the Ministry of Finance showed that Japan logged a
merchandise trade surplus of 670.17 billion yen in September.
That beat forecasts for a surplus of 556.8 billion yen following
the downwardly revised 112.6 billion yen surplus in August
The kiwi dropped to 1.1184 against the aussie, its lowest since
April 2016. The pair finished Wednesday's trading at 1.0966.
Further weakness may take the kiwi to a support around the 1.14
region.
The kiwi lost 1.7 percent to hit near a 5-month low of 0.7027
against the greenback, compared to 0.7149 hit late New York
Wednesday. The kiwi is poised to locate support around the 0.69
mark.
The kiwi slid to 1.6801 against the euro, a level unseen since
May 2016. The pair was valued at 1.6478 when it closed deals on
Wednesday. The next possible support for the kiwi is seen around
the 1.70 level.
Looking ahead, U.S. weekly jobless claims for the week ended
October 14 and leading indicators for September are set for release
in the New York session.
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