NZ dollar drops ahead of inflation data, as US stocks fall
NZ dollar drops ahead of inflation data, as stocks on Wall St fall
By Paul McBeth
Jan. 20 (BusinessDesk) – The New Zealand dollar dropped ahead of today’s inflation data, which will show a spike in consumer prices as the effects of the government’s GST hike feed into local prices.
New Zealand’s consumer price index rose 2.3% in the three months ended Dec. 31, according to a Reuters survey, though the bulk of that is due to an October increase in consumption tax to 15% from 12.5%. That comes as traders prepare for a large dump of Chinese data, which may show the world’s second-biggest economy grew a faster-than-expected 10.3% while inflation cooled to an annual pace of 4.6% in the same period. Stocks on Wall Street fell as U.S. housing data showed America’s property market was still in the doldrums and investment bank Goldman Sachs Group fourth-quarter earnings missed analysts’ forecasts.
“People are saying there’s less chance of China hiking rates – we haven’t got the official news yet, but if it is that low we might see the Aussie and the kiwi come back again,” said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional, referring to the trans-Tasman currencies colloquially. “The focus will be on CPI” and how markets interpret the skewed data, he said.
The kiwi dropped to 77.16 U.S. cents from 77.58 cents yesterday and declined to 68.87 on the trade-weighted index of major trading partners’ currencies from 69.22. It fell to 63.19 yen from 63.79 yen yesterday and decreased to 76.94 Australian cents from 77.07 cents. It slipped to 57.20 euro cents from 57.53 cents yesterday, and was down to 48.25 pence from 48.38 pence.
Kelleher said the currency may trade between 76.80 U.S. cents and 77.50 cents today, and is still in an uptrend on a longer-term basis.
Investors continued to support the euro after Germany boosted its economic growth forecast to 2.3% this year from 1.8% previously and rumours circulated that European Central Bank President Jean-Claude Trichet will be succeeded by Bundesbank President Axel Weber.
The U.S. and China reached an agreement on export deals worth US$45 billion, including a US$19 billion deal for the world’s most populous nation to buy 200 Boeing aircraft over the next two years. The kiwi fell 5.0611 yuan from 5.0877 yuan yesterday.
(BusinessDesk)