NZ dollar little changed as traders await key report on Chinese economy
By Tina Morrison
March 24 (BusinessDesk) – The New Zealand dollar is little changed ahead of a key report on the Chinese economy which is an indicator of gross domestic product.
The kiwi traded at 85.40 US cents from 85.32 cents at the New York close and 85.34 cents at 5pm in Wellington on Friday. The trade-weighted index edged up to 80.01 from 79.96 on Friday.
Investors today will be focused on China’s release of the HSBC flash manufacturing purchasing managers index for March as they try to gauge how Asia’s largest economy has fared in the first quarter. Economists expect the measure will remain in contraction but edge up to 48.7 in March, from a seven-month low of 48.5 in February. China is New Zealand and Australia’s largest trading partner.
“The key data event today will be the March China HSBC flash PMI,” Bank of New Zealand senior market strategist Kymberly Martin said in a note. “As markets are highly focused on China risk they will not be prepared to absorb any disappointment. A better-than-expected result would support both the New Zealand dollar and Australian dollar independently, but likely result in a weaker NZD/AUD.”
The New Zealand dollar slipped to 93.92 Australian cents at 8am from 94.15 cents on Friday.
The HSBC report, which comes ahead of an official PMI, is scheduled for release at 2:45pm New Zealand time. Chinese Premier Li Keqiang has said the economy faces “severe challenges” in 2014 although he has maintained the nation’s growth target of 7.5 percent for this year.
“The market is waiting to see how the authorities will choose to trade off their goals of strong economic growth on the one hand, and deflating a credit and housing bubble and liberalising the financial sector (in particular interest rates) on the other,” ANZ Bank New Zealand senior economist Sharon Zollner and senior FX strategist Sam Tuck said in a note.
The New Zealand dollar, which began direct trading with the Chinese currency within a set band last week, was at 5.316 yuan at 8am from 5.3119 yuan on Friday.
Later today, Europe’s flash PMIs and the US Markit PMI for March will also be released. European PMIs are expected to confirm a slow recovery while the US data is expected to remain solid at around 57, ANZ said.
The kiwi was little changed at 61.89 euro cents from 61.90 cents on Friday, 51.79 British pence from 51.68 pence and at 87.23 yen from 87.29 yen.