NZ dollar holds above 73 US cts amid subdued data

NZ dollar holds above 73 US cts amid subdued American data

By Peter Kerr

Aug. 4 (BusinessDesk) – The New Zealand dollar gained marginally against the greenback overnight, faring the same as most major currencies as middling data out of the U.S. signaled an economy struggling to regain traction.

American household purchases represent about 70% of the world’s largest economy, but according to figures from the Commerce Department, the June figures were unchanged from May. Contracts to buy existing houses unexpectedly dropped for a second month and factory bookings fell more than twice as much as economist estimated.

“There’s concern that the U.S. economy has a slowing momentum, and this caused its dollar to slide against most currencies,” said BNZ strategist, Mike Jones. “The kiwi rose against the greenback by default.”

Jones said the New Zealand dollar movements have been relatively quiet in the past couple of weeks, consolidating on previous gains. The trend is still for the kiwi to have some upward pressure, impacted by a further weakening U.S. dollar.

The kiwi rose overnight in spite of Fonterra’s global dairy trade auction price falling another 8%, more than expected, which in turn followed last month’s 14% drop, Jones said. Normally this would be an offsetting factor and push the kiwi down a bit, but last night traders shrugged off the news.

The kiwi climbed to 73.40 U.S. cents from 73.34 cents yesterday, and lifted to 67.68 on the trade-weighted index of major trading partners’ currencies from 67.61. It slipped to 63.01 yen from 63.06 yen and was little changed at 80.38 Australian cents from 89.35 cents. Against the euro, the kiwi rose to 55.47 cents from 55.35 cents, and marginally rose against the pound to 46.02 pence from 45.99 pence.

Jones said it is hard to see the kiwi dropping away substantially if the U.S. economic weaknesses continue.

“Investors are awaiting the New Zealand labour force survey due tomorrow, and will sit on the sidelines till then,” he said. “The N.Z. dollar should trade sideways in the 73-74 U.S. cents range.”

Investors are also waiting for the American non-farm payrolls data, due out Friday night. This is effectively the U.S. unemployment rate and will provide another guide as to whether its economic recovery is happening or not, Jones said.

(BusinessDesk)

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