NZ dollar holds gains after flat Chinese manufacturing
NZ dollar holds gains after flat Chinese manufacturing, slow US growth
By Paul McBeth
May 1 (BusinessDesk) - The New Zealand dollar held gains in local trading as tepid Chinese manufacturing figures failed to dent support for a currency that had gained after figures showed slower than expected US economic growth in the first quarter.
The kiwi traded at 86.13 US cents at 5pm in Wellington from 86.21 cents at 8am, up from 85.63 cents yesterday. The trade-weighted index advanced to 80.01 from 79.68 yesterday.
China’s purchasing managers’ index was little changed at 50.3 in April, just below expectations, indicating a marginal expansion of industrial production in the world’s second biggest economy. Markets were muted in Asian trading with Singapore and China closed for the May Day holiday.
The kiwi was boosted by weaker growth in the US than expected. Annualised gross domestic product expanded 0.1 percent in the March quarter, short of the 1.2 percent forecast by economists. After the GDP numbers, the Federal Open Market Committee kept the key rate near zero, trimming its quantitative easing programme by US$10 billion to $45 billion as expected.
“That GDP figure looks very much distorted by winter,” said Stuart Ive, senior client adviser at OMF in Wellington. “If we see the growth picture improve globally, the kiwi will get bought.”
OMF’s Ive said investors’ appetite for risk-sensitive assets has also been lifted by calming tensions between Russia and the West over Ukraine.
“It looks like Ukraine is going to be more a slow grind than a big bang,” he said.
He predicts the currency will trade between 85.20 US cents and 86.30 cents.
Traders will be watching the US ISM manufacturing survey for more signs of life in the world’s biggest economy ahead of the Friday non-farm payrolls report. European markets will be closed on Thursday for the May Day holiday.
The kiwi gained to 88.06 yen at 5pm in Wellington from 87.65 yen yesterday, and rose to 92.67 Australian cents from 92.19 cents. It was little changed at 62.07 euro cents from 62.01 cents yesterday, and advanced to 51.02 British pence from 50.87 pence.