New Zealand dollar falls, AU records three-week high

The New Zealand ranked as the worst performer on the market last Wednesday, opposite from how Australia performed, posting a three-week high record. The currency was heavily weighed down by weak oil prices and low foreign exchange liquidity.

Weak oil prices took a toll on the New Zealand dollar while local importers used the kiwi to settle Christmas supplies amidst low foreign exchange liquidity. The kiwi fell from 68.56 cents to 68.27 US cents as of 8 a.m. Wellington. Scoop also added that the trade-weighted index moved from 74.40 to 74.18.

"A lot of importers are making payments and paying bills to clear them off the books for the end of the month or the end of the year and therefore there will be natural selling pressure on the New Zealand dollar," explained Derek Rankin, director at Rankin Treasury Advisory in Auckland.

Report from the US Energy Information Administration revealed American inventories increased by 2.63 million barrels the week prior even with the warmer than normal northern hemisphere weather that caused oil prices to fall by 3 percent. Oil supply glut concerns weighed down on the commodity linked currencies. Rankin also added that importer selling will likely affect currencies. This is despite speculations on market turnovers for periods like the holidays.

The Australian dollar surged to a three-week high last Wednesday. Renewed investor interest over rebounding prices of iron and oil contributed to the rise. The dollar went over US$0.73 (AU$1) for a period and continued trading at US$0.7285 (AU$1) until 0430GMT. This is 0.3 percent higher compared to what it was trading in the previous day at the same time.

“Both the Australian and New Zealand dollar have risen strongly overnight in concert with the return of a risk-on theme witnessed in offshore markets,” The Wall Street Journal quoted Simon Fletcher who is a senior credit analyst at National Australia Bank in Sydney.