Friday 27 May 2016 08:38 AM
NZ dollar gains from 2-month low as weak US business data weighs on greenback
By Tina Morrison
May 27 (BusinessDesk) - The New Zealand dollar gained from a two-month low after weak US data on business spending dented demand for the greenback.
The kiwi touched a low of 66.90 US cents overnight and was trading at 67.47 cents at 8am in Wellington, from 67.16 cents at 5pm yesterday. The trade-weighted index advanced to 72.66 from 72.31 yesterday.
The kiwi was shunted lower yesterday after Fonterra Cooperative Group raised its opening farmgate milk price for next season by less than expected, stoking concerns about a third season of low prices for New Zealand's largest export commodity. However, the local currency rebounded overnight as the US dollar weakened after government data showed core capital goods orders, a closely watched proxy for business spending plans, fell 0.8 percent last month, marking the third consecutive monthly decline.
"At the margin, once commercial aircraft were stripped out from the US April durable goods data, business investment remained weak," ANZ Bank New Zealand senior economist Sharon Zollner and senior currency strategist Sam Tuck said in a note. "NZD/USD support at 0.67 held at multiple attempts in the last 24 hours, as USD eased off following softer capital goods orders."
Today, the focus will be on the second read of US first-quarter GDP and a speech by Federal Reserve chair Janet Yellen. ANZ said liquidity may be thin as markets close early ahead of the Memorial Day weekend in the US.
In New Zealand, Finance Minister Bill English and Prime Minister John Key are scheduled to deliver post-Budget speeches in Wellington and Auckland today.
ANZ expects the kiwi to trade between 66.50 US cents and 68.20 cents today.
The New Zealand dollar advanced to 93.42 Australian cents from 93.12 cents yesterday, gained to 46.01 British pence from 45.64 pence, rose to 74.03 yen from 73.70 yen, and increased to 4.4220 yuan from 4.4033 yuan.