NZ dollar gains after Chinese manufacturing data bolsters optimism about future growth
By Tina Morrison
Sept. 2 (BusinessDesk) – The New Zealand dollar gained after better manufacturing data from China boosted investor confidence about growth in Asia’s largest economy and as prospects fade for imminent western military action in Syria.
The kiwi advanced to 77.60 US cents at 8am in Wellington, from 77.19 cents at the New York close and 77.70 cents at 5pm in Wellington on Friday. The trade-weighted index was little changed at 73.61 from 73.67 in Wellington Friday.
Over the weekend, a Chinese manufacturing gauge for August rose to a 16-month high, bolstered by new orders and overseas demand, prompting some economists to raise their estimates for third quarter economic growth in the world’s second-largest economy. China is New Zealand’s second-biggest trading partner after Australia, which counts China as its largest trading partner.
“It shows a bit of a rebound going on in China,” said Tim Kelleher, head of institutional FX sales in New Zealand for ASB Bank. “Also, there has been no military action in Syria, which has calmed down things a bit. The risk on the day is probably on the upside.”
The New Zealand dollar will likely trade up to the top of its recent range of 78 US cents today, while the Australian dollar may rise to 90 US cents, from 89.39 US cents at 8am, Kelleher said.
Supporting the Australasian currencies, US President Barack Obama said he would seek approval from congress to take military action against Syria, which will delay any western response and restore some of investors’ risk appetite.
Meanwhile, a report yesterday showed the China’s Purchasing Managers’ Index improved to 51 in August, from 50.3 in July. Traders will be eyeing further reports on Chinese and European manufacturing today.
Trading will likely be quiet today as US financial markets are closed for a Labor Day Holiday.
In New Zealand today, a report at 10:45am will probably show second quarter terms of trade advanced 4.1 percent from the previous quarter, according to a Reuters poll.
The New Zealand dollar slipped to 86.73 Australian cents at 8am in Wellington, from 86.88 cents at 5pm on Friday. The local currency was unchanged at 76.34 yen and also unchanged at 58.66 euro cents. The kiwi weakened to 49.91 British pence from 50.07 pence on Friday.