NZ dollar recovers ground as Chinese data boosts transtasman currencies
The New Zealand dollar recovered most of its losses from Northern Hemisphere trading after upbeat Chinese manufacturing figures fuelled demand for the Australasian currencies, with both nations counting China is their biggest trading partner.
The kiwi rose to 84.16 US cents at 5pm in Wellington from 83.78 cents yesterday, down slightly from 84.58 cents yesterday. The Australian dollar traded at 96.47 US cents at 5pm in Wellington from 97.01 cents yesterday.
The HSBC preliminary reading of the purchasing managers' index showed Chinese manufacturing expanded at a faster pace than economists were expecting, easing concerns about the world's second-biggest economy after reports yesterday that the Chinese government is clamping down on local bank lending.
"The New Zealand dollar has been swept higher on the coat-tails of its trans-Tasman counterpart this afternoon, as upbeat October Chinese manufacturing data added to optimism the Chinese economy is stabilising," said Mike Jones, currency strategist at Bank of New Zealand in Wellington. "Still, a string of worrying headlines about rising Chinese debt issues is unnerving some investors, helping to cap gains in the Antipodean currencies."
International appetite for New Zealand assets appeared in today's auction for seven-year government bonds. The $200 million of notes sold at an average yield of 4.36 percent, and attracted 77 bids totalling $1.3 billion, meaning the auction was about 6.5 times overbid.
New Zealand government figures today showed a smaller annual trade deficit than expected of $1.54 billion in the 12 months ended Sept. 30, due to an increase in exported milk powder.
The kiwi dollar was little changed at 87.23 Australian cents from 87.16 cents yesterday after Reserve Bank of Australia deputy governor Philip Lowe said in a speech that nation's improving confidence, low interest rates and weaker currency should stoke industries outside its dominant resources sector.
The local currency fell to 81.92 yen at 5pm in Wellington from 82.49 yen yesterday, and dropped to 61.05 euro cents from 61.34 cents. It was little changed at 51.95 British pence from 52.04 pence yesterday. The trade-weighted index declined to 77.29 from 77.59 yesterday.