NZ dollar bounces off lows as NZ budget keeps surplus target, greenback support stumbles
By Paul McBeth
May 16 (BusinessDesk) - The New Zealand dollar came off its recent lows as Finance Minister Bill English’s budget kept the operating surplus target for 2014/15 intact, and as support for the greenback stumbled after US manufacturing data missed expectations yesterday.
The kiwi rose to 82.48 US cents at 5pm in Wellington from 82.25 cents at 8am, and 82.13 cents yesterday. The trade-weighted index gained to 77.60 from 77.13.
The New Zealand Treasury forecasts an operating surplus before gains and losses of $75 million in 2014-2015, in line with the estimate in December’s Half Year Economic and Fiscal Update. Growth expectations were largely unchanged on the pending release of a tidal wave of residential investment from the Canterbury rebuild, despite drought eating into gross domestic product.
The Dollar Index, a measure of the greenback against a basket of currencies, fell to 83.80 from 84.04 after New York manufacturing unexpectedly shrank last month and industrial production showed a bigger than anticipated contraction.
“There’s a ton of US data tonight and if we get more of the same of last night’s performance, that should push down the US dollar and help the kiwi bounce a bit more,” said Imre Speizer, market strategist at Westpac Banking Corp. “It shouldn’t be too much more than 83.25 US cents.”
The GDT-TWI Price Index fell 2.1 percent compared to the last sale two weeks ago on Fonterra Cooperative Group’s GlobaDairyTrade platform as a resurgent US dollar weighed more generally on commodity prices. The average winning price fell to US$4,549 a tonne from US$4,597 a tonne. The price reached US$4,968 a tonne last month, the highest since the GDT platform began in July 2008. Whole milk powder, the biggest product by volume, fell 1.7 percent to US$4,722 a tonne.
The New Zealand dollar gained to 83.44 Australian cents from 83.01 cents yesterday and rose to 84.30 yen from 83.90 yen. It increased to 64.07 euro cents from 63.49 cents yesterday and gained to 54.16 British pence from 53.92 pence.