The New Zealand dollar fell after weaker than expected retail sales data suggested interest rates will stay on hold for longer.But the local currency found support at lower levels and began rising again as the Australian dollar rose and the weak US dollar
The New Zealand dollar fell after weaker than expected retail sales data suggested interest rates will stay on hold for longer.
But the local currency found support at lower levels and began rising again as the Australian dollar rose and the weak US dollar story continued to be the main influence on the market.
The NZ dollar was at US75.87c by early afternoon. It fell from just above US76c to US75.65c on the retail sales data. This compares with US76.17c at 8am and US75.68c at 5pm yesterday.
Seasonally adjusted retail sales edged down less than 0.1 percent in August from July, Statistics New Zealand (SNZ) said.
Core retail sales, which exclude the vehicle-related industries, were down 0.6 percent following a flat month in July. Fifteen of the 20 industries in the core retail group recorded decreases in August, SNZ said.
Dealers said the 0.6 percent fall in the core figure was bigger than the 0.2 percent the market was expecting and it became the main focus for traders.
"The Reserve Bank of New Zealand (RBNZ) highlighted the weakness in household spending in its September Monetary Policy Statement, and today's data certainly indicates households remain cautious in regards to spending," ASB said.
"While today's result points to little sign of households bringing forward purchases of major items ahead of the goods and services tax increase in October, more recent September electronic card transactions data shows a robust increase in durables spending. This suggests declines recorded in some of the components will largely reverse out in the following month. Nonetheless, the weakness in August retail sales reinforces our expectations the RBNZ will hold off increasing the official cash rate until the March 2011 meeting."
The NZ dollar had peaked near US76.35c on Wednesday night, according to Reuters data.
The NZ dollar was A76.36c by early afternoon from A76.83c at 8am. It was at 62.03 yen from 62.30 yen at 8am and 61.95 yen at 5pm yesterday.
It eased to 0.5425 euro from 0.5458 euro at 8am from 0.5422 at 5pm. The trade weighted index fell to be little changed at 67.18 from 67.14 at 5pm.
