New Zealand Dollar Advances as Technical Indicator Signals Excessive Loss

Bloomberg News, 

New Zealand Dollar Advances on Speculation Loss Was Excessive

March 8 (Bloomberg) -- New Zealand’s dollar advanced, halting a five-day loss, as a technical indicator showed its recent declines may have been excessive.

The kiwi, the currency’s nickname, rebounded from the weakest level since September against the yen as traders reduced their bets that the central bank will cut interest rates at its meeting this week. Australia’s dollar continued to weaken against most major currencies as oil touched a 29-month high, which spurred concern that global economic growth may slow.

“It seems traders are adjusting their positions after seeing a rapid drop in the kiwi,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin-trading services. “Rising oil prices will keep weighing on stocks and thus the Australian dollar as long as uncertainty remains in the Middle East.”

The New Zealand dollar rose 0.4 percent to 73.99 U.S. cents at 11:33 a.m. in New York from 73.69 yesterday, after falling to 73.39 on March 4, the weakest since Oct. 1. The kiwi gained 1 percent to 61.23 yen from 60.60 yesterday, when it touched 60.35 yen, the weakest since Sept. 9.

Australia’s currency fell 0.2 percent to $1.0098 from $1.0119 yesterday. It rose 0.4 percent to 83.52 yen from 83.21.

The kiwi rebounded from the lowest level since September against the yen as the 14-day relative strength index for the currencies fell to 29.5 yesterday, below the 30 threshold that some traders see as a sign an asset’s price has fallen too far and is poised to rise. The gauge for New Zealand’s currency versus the U.S. dollar dropped to 32.7 yesterday.

Raise Not Cut

Swaps traders are betting that the Reserve Bank of New Zealand will add 5 basis points to its benchmark rate of 3 percent during the next 12 months, according to a Credit Suisse Group AG index. The gauge signaled a cut of 20 basis points on March 2. A basis point is 0.01 percentage point.

Oil traded near a 29-month high in New York as OPEC members are discussing whether to hold an emergency meeting and any decision on increasing oil output would be taken then, Sheikh Ahmad al-Abdullah, Kuwait’s oil minister said.

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