Kiwi may fall further in risk aversion

The NZ dollar may fall this week as investors get jittery about the speed and strength of the global recovery and flock back to so-called safe-haven currencies such as the US dollar and yen reports The NZ Herald. Four of seven economists and strategists in a BusinessWire survey predict the kiwi will decline this week as traders grow nervous about the sustainability of the US economic recovery, and eschew higher-yielding, or riskier, assets. Two forecast the currency will consolidate in its current range, and the last anticipates the kiwi will edge higher after it slumped 4.8 per cent against the greenback last week. Stocks tumbled around the world amid renewed fears about the state of the US financial sector. Concerns were heightened by the Securities and Exchange Commission drawing close to settling with institutions, including Bank of America and UBS, after a three-year investigation into the manipulation of municipal bonds, the Wall Street Journal reported. "The kiwi has crashed back to earth with a thud last week, and will probably struggle through this week," said Mike Jones, strategist at Bank of New Zealand. "Equity markets have renewed concerns about the US financial sector, and the last few releases of data have justified this sentiment." Jones predicts the kiwi will fall this week, with strong initial support around 70.50 US cents. If this breaks, the next key level will be at 69 cents. The currency recently traded at 71.49 cents from 72.90 cents on Friday in New York.