NZ dollar gains as local data stokes optimism in thin trading
By Paul McBeth
Aug. 15 (BusinessDesk) - The New Zealand dollar extended its gains to the top of its recent range as local data stoked optimism about the pace of the country’s recovery. Summer holidays in the Northern Hemisphere kept trading volumes thin.
The kiwi rose to 80.56 US cents at 5pm in Wellington from 80.31 cents at 8am and 79.82 cents yesterday. The trade-weighted index advanced to 75.80 from 75.36 yesterday.
New Zealand’s manufacturing sector continued to expand in July and consumer confidence stayed at elevated levels, according to two surveys published today. That added to investor optimism about New Zealand’s recovery, with figures yesterday showing a faster pace of growth in consumer spending than estimated. That comes as trading desks in Europe and North America are lighter than usual for the summer holidays, meaning there’s more opportunity for bigger movements in a less liquid market.
“It doesn’t take as big an amount to have a shock now and does provide opportunity to see bigger moves,” said Alex Hill, head of dealing at HiFX in Auckland. “There are some really critical levels up at 81.20 US cents, and there’s a lot of selling interest up there.”
Investors will shift their focus to the US during the New York session, with a slew of data feeding into the how the world’s biggest economy is faring. The Federal Reserve is expected to start unwinding its stimulus programme because of the nation’s improving economy.
“At the moment, the domestic story is getting pushed to the side,” HiFX’s Hill said. “Expect the next big move on significant news when the Fed’s going to start tapering.”
The kiwi traded at 87.82 Australian cents at 8am in Wellington from 87.75 cents yesterday and advanced to 78.73 yen from 78.29 yen. The local currency rose to 60.62 euro cents from 60.19 cents yesterday and increased to 51.92 British pence from 51.69 yesterday.