NZ dollar gains as buyers return after selloff
By Jason Krupp
Aug. 17 (BusinessDesk) - The New Zealand dollar rose against the greenback, with strong buying interest in the kiwi after yesterday's heavy selloff helping the currency to sidestep the pullback in risk appetite on global equity markets.
The New Zealand dollar recently traded at 83.66 U.S. cents, up from 83.08 yesterday, and rose to 71.76 on the trade-weighted index of major trading partners' currencies from 71.40 previously.
Global equity markets reversed their recent run of gains overnight after official data showed the euro zone economy slowed in the second quarter, with investors particularly rattled by the fall in German growth. Euro zone GDP grew at just 0.2% in the three months to July, well below the 0.8% growth seen in the first quarter. The figures showed German's economy expanded at a 0.1% pace in the period, with first quarter GDP numbers revised to 1.3% from 1.5% previously.
On Wall Street, the Standard & Poor's 500 Index fell 1% to 1,192.76, Europe's Stoxx 600 Index declined 0.1% to 237.56, and the 19-commodity Thompson Reuters Jefferies CRB Index slipped 0.1% to 330.19.
"The kiwi just made up ground from the previous day when there was heavy selling," said Imre Speizer, a market strategist at Westpac Banking Corp. "There was nothing to pin the currency's outperformance on, certainly the only bit of data was Fonterrra and that was weaker."
On the crosses, the New Zealand dollar recently traded at 79.88 Australian cents, up from 79.60 cents yesterday, and rose to 64.25 Japanese yen from 63.85 yen previously. It gained to 58.12 euro cents from 57.69 cents yesterday, and was little changed at 50.81 pence from 50.84 pence.
The average prices of dairy products recorded their smallest decline in five sales at Fonterra Cooperative Group’s latest online auction, with the GDT-TWI Price Index falling 0.9% to US$3,660 a metric tonne. That’s the lowest since the early December sale.
Whole milk powder fell 2.2% to US$3,385 a tonne and skim milk powder fell 0.8% to US$3,438 a tonne. Anhydrous milk fat fell by an average 0.3% to US$4,273 a tonne and milk protein concentrate rose 5.9% to US$5,965 a tonne. Rennet casein fell 0.3% to US$9,473 a tonne. Butter milk powder rose 3% to US$3,420 a tonne.
The kiwi dollar may trade between a range of 82.80 U.S. cents and 84 cents, Speizer said, with the currency looking to remain locked in within the range on the day.