NZ dollar gains against Aussie amid reviving local economy

NZ dollar gains against Aussie as surveys point to a reviving local economy

By Tina Morrison

Nov. 15 (BusinessDesk) – The New Zealand dollar advanced against the Aussie after positive forward looking surveys yesterday painted a brighter picture for the local economy.

The kiwi rose to 88.79 Australian cents at 8am in Wellington, from 88.63 cents at the 5pm market close yesterday. The local currency was little changed at 82.77 US cents from 82.87 cents yesterday.

The outlook for the New Zealand economy is picking up, with optimism bolstered by surveys yesterday showing New Zealand manufacturing expanded at its fastest pace for an October month in six years, and consumer confidence was at its highest level since January 2010. In contrast, a business confidence survey in Australia earlier this week suggested a slowdown in that nation’s economy continues to play out.

“The upbeat data of yesterday is helping buoy the cross and that’s underpinned the kiwi more generally on the cross rates such that we have outperformed once again against the likes of the euro and the yen,” said Mike Jones, currency strategist at Bank of New Zealand.

“There have been some calls across the Tasman for currency intervention which is providing a few headwinds for the Aussie dollar as well,” Jones said. “They just don’t have the sort of economic strength that continues to shine through in New Zealand.”

BNZ’s Jones expects the more buoyant outlook in New Zealand to push the kiwi above 89 Australian cents next week.

Meanwhile, there has been little direction for the greenback overnight following the testimony of Janet Yellen, who is set to replace Federal Reserve chairman Ben Bernanke next year. Yellen indicated in comments to the senate banking committee considering her nomination that she was in no hurry to start trimming the central bank bond purchases until officials were confident of a strong economic recovery.

“The market did its best to read some dovish undertones into the Yellen testimony but that really hasn’t come to much and there really wasn’t anything particularly new for currency markets there so there hasn’t been any big moves against the US dollar,” said the BNZ’s Jones.

“Major currencies are still shuffling around inside their recent ranges,” Jones said. “There is probably just a bit of disappointment that we didn’t get anything more exciting out of Janet Yellen.”

In the US tonight, traders will be eyeing a New York factory survey for November which may show a bounce following the US government partial shutdown last month, and data is also scheduled for release on industrial production for October.

The New Zealand dollar advanced to 82.77 yen from 82.57 yen yesterday after Japan’s finance minister Taro Aso said currency intervention was still a policy option

The kiwi was little changed at 61.51 euro cents from 61.52 cents yesterday and slipped slightly to 51.50 British pence from 51.66 pence. The trade-weighted index was little changed at 77.45 from 77.43 yesterday.

(BusinessDesk)

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