NZ dollar rises against weather-weakened greenback
NZ dollar rises against greenback weakened by sluggish retail sales, winter storms
By Tina Morrison
Feb 14 (BusinessDesk) – The New Zealand dollar rose as weaker US retail sales and concerns about disruption to the economy from winter storms weighed on the greenback.
The kiwi rose to 83.52 US cents at 8am in Wellington from 83.11 cents at 5pm yesterday. The trade-weighted index advanced to 78.50 from 78.28 yesterday.
The US dollar weakened after a report showed retail sales declined by the most in 10 months amid signs that adverse winter weather conditions are weighing on economic growth as yet another storm battered the eastern US. Traders are concerned that the impact of winter weather will slow economic growth in the world’s largest economy, and the key payrolls survey this week will probably show the negative impact of people failing to get to work.
“The US dollar is broadly weaker across the board,” said ANZ Bank New Zealand senior FX strategist Sam Tuck. “The weaker US retail sales and the fact that New York and Washington are under six inches plus of snow right at the moment during payrolls survey week is weighing on peoples’ mind about when we could potentially get some good economic news out of the US.
“When people can’t get to work you lose production, you lose activity and people don’t spend,” Tuck said. “If it goes on for long enough it is a real impact. That broadly keeps the US dollar from appreciating.”
The New Zealand dollar touched a fresh two-week high of 93.14 Australian cents early this morning, and was trading at 92.91 cents at 8am from 92.89 cents at 5pm yesterday after worse-than-expected employment figures in Australia yesterday raised doubts about the pace of economic recovery.
“We saw the weaker Aussie employment add some buying pressure into the New Zealand dollar yesterday afternoon as people sold Aussie and bought Kiwi so part of the kiwi strength is due to that,” said Tuck.
In New Zealand today, data is released on food prices for January at 10:45am while the Real Estate Institute of New Zealand may publish its latest report on house sales for January around midday.
Traders will be eyeing a speech in Sydney by Reserve Bank of Australia assistant governor (economic) Christopher Kent on ‘The Resources Boom and the Australian dollar”, as well as data on Chinese inflation, Eurozone GDP, and US industrial production and the University of Michigan consumer confidence survey.
The kiwi advanced to 50.17 British pence from 49.98 pence. Comments from the Bank of England chief economist Spencer Dale that market pricing for interest rate hikes in spring 2015 seem “reasonable” and should underpin demand for sterling, he told BBC Radio 5.
The kiwi was little changed at 61.08 euro cents from 61.01 cents yesterday and increased to 85.33 yen from 84.87 yen.