NZ dollar rises on global growth, less chance of Syria move
NZ dollar rises on global growth optimism, waning prospects of imminent western action in Syria
By Tina Morrison
Sept. 3 (BusinessDesk) – The New Zealand dollar advanced after positive manufacturing data in Europe and China boosted optimism about global growth and the prospects of imminent western military action in Syria faded.
The kiwi rose to 78.11 US cents at 8am in Wellington from 77.87 cents at 5pm yesterday with the US markets closed for a public holiday. The trade-weighted index rose to 74.13 from 73.86 yesterday.
Optimism about global growth rose after data showed manufacturing in China and Europe expanded, boosting demand for commodity currencies such as the New Zealand dollar. Investor aversion to risk assets waned after US president Barack Obama said he would seek Congress approval for military action in Syria, delaying any action and raising the possibility that it won’t be supported by Congress
“Global growth is on the up without doubt on the manufacturing front,” said OMF Financial senior client advisor foreign exchange and derivatives Stuart Ive. “That was added to by the more prolonged reaction to the Syrian situation. It’s a general feeling of risk coming back onto the market, albeit maybe on a temporary basis.”
OM Financial’s Ive expects the kiwi today to edge back up to its overnight high of about 78.35 US cents, with support at 77.85 cents.
Reports yesterday showed factory activity in the euro zone rose at its fastest pace in more than two years while China’s manufacturing sector grew in August for the first time in four months. The US Institute of Supply Management is set to publish its bellwether PMI for US factories today, with a Reuters poll showing the index is expect to slip to 54 from July’s 55.4.
In New Zealand, the ANZ Commodity Price Index at 1pm is expected to show continued strength, Ive said.
Currency strategists today will also be eyeing activity in Australia, New Zealand’s largest trading partner. Australian retail sales at 1:30pm local time are expected to rise 0.4 percent and the current account balance, due out at the same time, is forecast to remain unchanged. Meanwhile, the Reserve Bank of Australia is expected to keep interest rates unchanged at 2.5 percent at 4:30pm local time ahead of a Federal election this weekend.
The New Zealand dollar edged up to 86.87 Australian cents at 8am in Wellington, from 86.80 cents yesterday. The local currency rose to 77.63 yen from 76.77 yen yesterday as demand dropped for the safe-haven Japanese currency.
The kiwi advanced to 59.19 euro cents from 58.98 cents yesterday and gained to 50.25 pence from 50.06 pence yesterday.