NZ dollar gains before retail sales as stock markets strengthen
Nov. 14 (BusinessDesk) - The New Zealand dollar gained before retail sales figures that will provide more evidence of the pace of the economy after surprisingly weak employment figures as stronger equity markets overnight gave a bid tone to the local currency.
The kiwi dollar rose to 81.98 US cents from 81.66 cents at 5pm in Wellington yesterday. The trade-weighted index rose to 73.42 from 73.19.
Home Depot led gains on the Dow Jones Industrial Average after posting third-quarter results that beat forecasts, while providing an optimistic picture for the coming months-for its own future and that of the US housing industry in general. At home, retail sales volumes slowed to a 0.5 percent pace in the third quarter for an annual gain of 2.9 percent, according to a Reuters survey.
“The global backdrop remains supportive of the NZD,” said Mike Jones, currency strategist at bank of New Zealand. “A late flourish in stock markets and commodity prices helped the NZD/USD finish the night near the top of its overnight 0.8160-0.8200 range.”
Weak retail sales “would likely encourage the markets to up the odds of a December OCR cut,” he said.
There is a 24 percent chance of a rate cut on Dec. 6, based on the Overnight Index Swap curve and 16 basis points of cuts are seen over the next 12 months.
The New Zealand dollar rose to 78.52 Australian cents from 78.42 cents yesterday before third quarter wage cost data in Australia that’s expected to show the wage price index slowed to a 0.8 percent pace for an annual gain of 3.8 percent.
The kiwi gained to 64.52 euro cents from 64.35 cents and rose to 51.63 British pence from 51.44 pence. The currency rose to 65.07 yen from 64.72 yen.