The New Zealand dollar rose to a four-week high against its trans-Tasman counterpart as weaker-than-expected capital spending figures in Australia added to a string of disappointing data. The kiwi also rose after Fonterra Cooperative Group hiked its forecast milk payout.
The kiwi rose as high as 93.16 Australian cents, the highest since Jan. 31, trading at 93.11 cents at 5pm in Wellington from 92.47 cents yesterday. The local currency rose to 83.22 US cents at 5pm from 82.90 cents at 8am, down from 83.30 cents yesterday.
Australian total capital expenditure fell a seasonally adjusted 5.2 percent in the final three months of 2013, according to the Bureau of Statistics, more than economists were expecting and adding to yesterday's weak construction figures. The weak economic data comes after the Reserve Bank of Australia shifted away from an easing bias on monetary policy amid signs of firmer consumer demand and improvement in business conditions and confidence.
"The kiwi/Aussie has been strong all day after that weak capex data was worse than expected and added to a run of poor Aussie data," said Tim Kelleher, head of institutional FX sales at ASB Institutional in Auckland. "If it wasn't for the fact the RBA shifted from an easing bias to neutral, you'd see the Aussie being lower."
New Zealand's currency was boosted by Fonterra Cooperative Group, the world's biggest dairy exporter, lifting its forecast payout to farmers by 35 cents to $8.65 per kilogram of milk solids for the 2013/14 season. It was also supported by government figures showing a near-doubling in exports to China in January underpinning a bigger than expected trade surplus, and inbound net migration at a 10-year high.
"Fonterra was definitely good for New Zealand," ASB's Kelleher said. He expects the local currency will probably be capped at 83.50 US cents during the Northern Hemisphere session.
Traders will be looking to see whether new Federal Reserve chair Janet Yellen signals the central bank will continue to taper its bond-buying programme in testimony before the Senate Banking Committee on Thursday in Washington.
The local currency was little changed at 85.21 yen from 85.28 yen yesterday, and gained to 60.79 euro cents from 60.63 cents. It traded at 49.91 British pence from 49.95 pence yesterday. The trade-weighted index increased to 78.32 from 78.19.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- No chief of staff leaves one year before an election, says Matthew Hooton
- 'Grumpy as hell' Bill Bennett says he'll use a VPN to connect to Chelsea's club channel
- NZForex's Alex Hill says the market will be paying more attention to data, than comments from officials
- Timely chief executive Ryan Baker on making an unfashionable profit
- NZ King Salmon CEO Grant Rosewarne on his company's float plans