NZ dollar edges higher as investors await US retail sales
NZ dollar edges higher as investors await US retail sales for direction
By Paul McBeth
May 13 (BusinessDesk) - The New Zealand dollar edged higher in local trading as investors await US retail sales to gauge the strength of the world’s biggest economy.
The kiwi rose to 86.31 US cents at 5pm in Wellington from 86.17 cents at 8am and 86.21 cents yesterday. The trade-weighted index increased to 80.21 from 80.10 yesterday.
Consumer spending in the US probably grew 0.4 percent last month, according to a Bloomberg survey of economists, in a sign the world’s biggest economy is on track to recovery. Retail sales kick off a data-heavy week in the US, including inflation, manufacturing and housing figures, as well as a speech by Federal Reserve chair Janet Yellen. Traders are watching for the greenback to start appreciating as the US recovery prompts the Fed to exit its quantitative easing and zero-interest rate policies.
“There’s a fairly decent flow of US data with CPI (consumer price index) and retail sales - strength should be good for the greenback,” said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. “Currencies look like they don’t know what to do with the US dollar. Do they continue with the rebound that happened very late last week, or go back to trashing the US dollar?”
Markets will keep tabs on the New Zealand Reserve Bank’s financial stability report tomorrow for an update on the housing market, and whether that might have a bearing on the interest rate track. Traders have pared back their expected pace of future rate hikes as inflation remains contained in an accelerating economy.
The kiwi advanced to 92.25 Australian cents from 92.09 cents yesterday ahead of Australia’s Federal government budget, which is expected to show deep spending cuts in the face of ballooning deficits.
The local currency increased to 62.71 euro cents from 62.63 cents ahead of Germany’s ZEW survey of economic sentiment. It was little changed at 51.11 British pence from 51.15 pence yesterday, and gained to 88.27 yen from 87.91 yen.