Kiwi rises above 72 USc for first time in 3 months on local growth story
The New Zealand dollar rose above 72 US cents for the first time since the beginning of March as the nation's relatively robust economic growth story lifted sentiment.
The kiwi rose to 71.87 US cents as at 8am in Wellington, and earlier touched 72.05 cents, from 71.56 cents late yesterday. The trade-weighted index rose to 77.24 from 76.98.
The GDT price index rose 0.6 percent in the GlobalDairyTrade auction overnight to US$3,395, marking the sixth consecutive gain, although whole milk powder fell. The auction is just one of a number of positive indicators for New Zealand including terms of trade rising to a 44-year high in the first quarter, driven by prices of dairy and forest product exports. Business confidence rose in May, as did New Zealand commodity prices. By contrast, data on Friday showed the US economy isn't adding jobs as fast as expected.
"The NZD should be elevated, with the recent strength in part driven by local fundamentals (such as the terms of trade) and fading policy-related support for the USD," said Con Williams, rural economist at ANZ Bank New Zealand, in a report. "Despite that combination, we're coy chasing the NZD around current levels."
Traders today will be watching for first quarter manufacturing sales but also keeping an eye out across the Tasman for first-quarter gross domestic product, expected to show the Australian economy slowed to a 0.3 percent pace of growth from 1.1 percent in the fourth quarter last year, for an annual rate of 1.6 percent down from 2.4 percent.
The kiwi dollar rose to 95.67 Australian cents from 95.53 cents late yesterday and has gained 5.5 percent from its low in mid-March, prompting some strategists to ponder whether the kiwi has a chance of reaching parity with its Australian counterpart. New Zealand releases first-quarter GDP next week and is expected to show growth accelerated to 0.9 percent from 0.4 percent three months earlier, according to the Reserve Bank's latest forecast.
The kiwi rose to 63.69 euro cents from 63.53 cents and gained to 55.65 British pence from 55.37 pence. The kiwi traded at 78.62 yen from 78.66 yen and gained to 4.8771 yuan from 4.8656 yuan.