Kiwi gains as evidence of emerging US inflation fails to arrest greenback's slide

Today traders will be watching for the BNZ manufacturing PMI for January.

(BusinessDesk) - The New Zealand dollar rose, briefly climbing above 74 US cents, as signs of emerging inflation pressures in the US failed to halt the greenback's slide to a 15-month low vs the yen.

The kiwi rose to 73.95 US cents as at 8am in Wellington after having reached 74.10 cents overnight, from 73.71 cents late yesterday. The trade-weighted index increased to 75.50 from 75.33.

The US producer price index (PPI) excluding food and energy rose 0.4 percent in January, twice the pace expected, for a year-on-year gain of 2.2 percent, also above expectations. The figures came a day after stronger-than-expected US CPI data. Meanwhile, the Federal Reserve Bank of Philadelphia said regional manufacturing activity grew faster than expected this month.

"The USD continues to languish, sending kiwi briefly above 74 cents," said Sharon Zollner, chief economist at ANZ Bank New Zealand, in a note. "We don't believe this thematic will last, but it is hard to stand in its way right now."

The yen strengthened against the greenback after Japan's Finance Minister Taro Aso yesterday said the currency's strength wasn't enough to warrant special intervention. The kiwi edged up to 78.64 yen from 78.55 yen.

Today traders will be watching for the BNZ manufacturing PMI for January, which slipped to 51.2 the previous month. Across the Tasman, Reserve Bank governor Philip Lowe is due to give testimony before a parliamentary committee.

The kiwi dollar rose to 93.27 Australian cents from 92.90 cents yesterday, when data showed the Australian unemployment rate fell to 5.5 percent in January from 5.6 percent in December but the number of people in full-time work fell by 49,800 in January.

​The kiwi traded at 52.51 British pence from 52.58 pence. It was little changed at 59.16 euro cents and rose to 4.6906 yuan from 4.6754 yuan.