NZ dollar slips as Chinese intervention calms markets, US payrolls loom
By Paul McBeth
Sept. 3 (BusinessDesk) - The New Zealand dollar fell after intervention by China to prop up ailing equities calmed volatile markets ahead of this week's US employment data, which may keep alive chances of a rate hike by the Federal Reserve this month.
The kiwi traded at 63.41 US cents at 5pm in Wellington from 63.42 cents at 8am, down from 63.63 cents yesterday. The trade-weighted index was little changed at 68.94 from 69.04 yesterday.
Equity benchmark indexes on Wall Street rose yesterday after Chinese state funds bought stocks to support the Shanghai Composite Index ahead of a two-day holiday for Victory Day commemorations. Traders are awaiting US non-farm payrolls data on Friday in Washington after a private payrolls report and Fed snapshot of the US regional economy provided enough good news to leave the door open for a rate hike when the US central bank reviews policy this month.
"We had stability yesterday when the (Chinese) authorities intervened, and what we're waiting for now is the payrolls number of Friday night and what the Chinese equity market does on Monday - part of the reason they would have been supporting it was for the Victory Day celebrations," said Raiko Shareef, currency strategist at Bank of New Zealand in Wellington. "If we don't have an equity market shake-out, the kiwi's probably still supported above 63 (US cents)."
New Zealand government data today showed the volume of building work put in place rose 1.6 percent in the June quarter, as a pick-up in commercial activity offset a decline in residential construction. Meantime, a private realtor's survey showed an increase in sales of houses in Auckland, the country's biggest city, with a flood of new listings entering the market ahead of new loan restrictions slated for a November start.
New Zealand's two-year swap rate was unchanged at 2.79 percent, and the 10-year swap increased two basis points to 3.61 percent.
The local currency was little changed at 90.34 Australian cents from 90.47 cents yesterday after retail sales across the Tasman for the first time in 14 months. It fell to 4.0296 Chinese yuan from 4.0490 yuan yesterday, and traded at 76.40 yen from 76.48 yen. The kiwi edged up to 56.53 euro cents from 56.40 cents, and was little changed at 41.47 British pence from 41.56 pence.