NZ dollar little changed

The New Zealand dollar was little changed, having briefly rallied on Friday in the US on weaker-than-expected US retail sales, as traders await more economic data in the domestic economy that would give a clue to the track of interest rates.

The kiwi dollar traded at 71.86USc as at 8am in Wellington, from 72USc in late New York trading on Friday. The kiwi climbed as high as 72.53USc after figures showed little changed US retail sales for July against forecasts for a 0.4% gain. The trade-weighted index slipped to 76.15 from 76.30 at the end of last week.

The market will be watching a reading of the services sector due out today after the BNZ-BusinessNZ performance of manufacturing index fell 1.8 points to a seasonally adjusted 55.8 in July, extending an expansion that is being underpinned by the construction industry. Retail sales rose a stronger-than-expected 2.3% in the second quarter, seasonally adjusted, and the PSI today is also expected to remain in expansion mode.

"Until the New Zealand dollar’s growth story deteriorates or the US dollar finds more sustained support (which will require a better data signal than the latest retail sales figure), the NZ dollar will remain a 'buy on dips' even with the Reserve Bank in the process of narrowing yield differentials," ANZ New Zealand senior economist Philip Borkin said in a note. "New Zealand’s growth story looks solid, particularly relative to many others. In that environment, it is hard to see the NZ dollar falling far even with the Reserve Bank in the process of narrowing interest rate differentials."

The kiwi traded at 93.81Ac from 94.12Ac in New York on Friday. It dropped to 4.7634 yuan from 4.7733 yuan and fell to ¥72.69 from ¥72.84. The local currency declined to 55.56 British pence from 55.77 pence and slipped to 64.32 euro cents from 64.44 cents.

(BusinessDesk)

Jonathan Underhill
Mon, 15 Aug 2016

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NZ dollar little changed