NZ dollar gains as consumer confidence improves
The New Zealand dollar gained in local trading as improving consumer confidence and a pick-up in the service sector stoked optimism about the pace of the nation's economic recovery.
The New Zealand dollar gained in local trading as improving consumer confidence and a pick-up in the service sector stoked optimism about the pace of the nation's economic recovery.
BUSINESSDESK: The New Zealand dollar gained in local trading as improving consumer confidence and a pick-up in the service sector stoked optimism about the pace of the nation’s economic recovery.
The kiwi rose to 82.59 US cents at 5pm from 82.19 cents at 8am and was up from 82.40 cents on Friday in New York. The trade-weighted index climbed to 73.58 from 73.40 last week.
A revival in New Zealand consumer confidence bolstered appetite for the currency as households bounced back from last year’s gloomy mood and were more likely to return to the stores, according to the Westpac McDermott Miller Consumer Confidence survey. A record pace of expansion in New Zealand’s service sector for the month of February added to the positive tone for the kiwi as the BNZ-Business NZ performance of services index showed signs of life in the economic recovery.
The consumer confidence and PSI surveys “add to the pretty healthy looking picture for the New Zealand economy,” said Mike Jones, strategist at Bank of New Zealand. “If we do see the kiwi gain, it will come through against the Aussie” as support for the greenback firms, he said, referring to the Australasian and US currencies colloquially.
Today’s figures come in the lead-up to fourth-quarter gross domestic product and balance of payments, which are expected to show New Zealand’s economy grew at a pace of 0.6 percent in the last three months of 2011, with a current account deficit of 4 percent of GDP, according to a Reuters survey of economists.
“If we get something like 0.6 percent, that’s a pretty respectable result given the earthquake, European crises and all manner of unexpected events through Q4,” Jones said.
The nation’s economic recovery is tipped to be slower and shallower than previously thought, according to a New Zealand Institute of Economic Research survey of economists. The respondents trimmed their growth expectations for a second successive quarter as the Canterbury rebuild is pushed out.
That’s helping to keep interest rates in check, with respondents not expecting a hike in the official cash rate until the end of this year, or early next year. Traders are betting on the possibility of two increases over the coming year, pricing in 32 basis points of increases in the next 12 months on the Overnight Index Swap curve.
Reserve Bank Governor Glenn Stevens will deliver a speech on the state of the economy in Hong Kong today. That comes ahead of the release of the minutes from last week’s RBA meeting, where the central bank kept the target cash rate on hold at 4.25 percent.
The kiwi rose to 77.89 Australian cents from 77.74 cents last week, and gained to 68.95 yen from 68.74 yen. It climbed to 62.72 euro cents from 62.55 cents on Friday in New York, and advanced to 52.17 pence from 52 pence.