Dollar gains as outlook for local economy trumps US executive orders
"It was another night where the NZ dollar performed well against the US dollar and on crosses."
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The New Zealand dollar rose as optimism about the outlook for the domestic economy boosted the kiwi while markets tried to assess the implications of US President Donald Trump's executive orders such as a halt to some inbound migrants.
The kiwi traded at 72.82USc as at 8am in Wellington from 72.65USc late yesterday. The trade-weighted index rose to 79.65 from 79.46.
The kiwi has now traded above 72USc for a week and has been helped by expectations the Reserve Bank will begin raising interest rates this year, especially since data last week confirmed inflation has accelerated back within its target band for the first time in two and a half years. The greenback fell against the yen and US stock benchmarks declined as US investors reacted to Mr Trump's temporary ban on travellers from seven Muslim-majority countries at the weekend. He has since clarified that it doesn't apply to green card holders.
"It was another night where the NZ dollar performed well against the US dollar and on crosses," Philip Borkin, senior economist at ANZ Bank New Zealand, said in a note. "It is hard to see that changing dramatically any time soon given New Zealand's strong domestic picture. It is still unclear how a more isolationist US could affect markets. And then there is the issue that on any given day a Tweet or executive order could derail well-thought out plans. It does appear as though markets are increasingly reflecting that unease."
Traders will be watching for migration figures for December for any signs that the record inbound flow is abating.
Traders are also looking ahead to labour market data on Wednesday which may show the jobless rate held below 5 percent, while the Federal Open Market Committee isn't expected to change US interest rates at the end of its two-day meeting but may give an indication of its timing for a hike. US payrolls figures for January round out the week, with the world's biggest economy forecast to have added 168,000 jobs this month, up from 156,000 the previous month.
The kiwi rose to 96.41Ac from 96.16Ac yesterday. It rose to 5.0063 yuan from 4.9974 yuan and gained to 68.09 euro cents from 67.70 cents. It gained to 58.35 British pence from 57.76 pence and fell to ¥82.76 from ¥83.14 .
(BusinessDesk)
Jonathan Underhill
Tue, 31 Jan 2017
Tue, 31 Jan 2017
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
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Dollar gains as outlook for local economy trumps US executive orders
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