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NZ dollar pares losses after weak US manufacturing data
The New Zealand dollar pared some losses on US dollar
weakness after soft manufacturing data there
overnight.
The kiwi was trading at 62.44 US cents at 8am in Wellington after touching an overnight low of 62.04 cents. It was 62.43 cents at 5pm yesterday. The trade-weighted index was at 69.88 from 70.08 late yesterday.
The kiwi fell after the Reserve Bank of Australia’s 25 basis point rate cut “weighed on the Aussie and dragged kiwi along for the ride,” said Kiwibank FX trader Mike Shirley. The Australian rate cut has increased the odds that the Reserve Bank of New Zealand will follow suit in November.
The kiwi pared those losses when the greenback fell after the weaker-than-expected manufacturing data.
The Institute for Supply Management’s factory index slipped to 47.8 in September, the lowest since June 2009, Bloomberg reported. The figure missed all estimates in a Bloomberg survey that had called for an increase from August’s 49.1. The group’s production gauge slipped to a 10-year low while the employment measure also dropped to the lowest since January 2016.
“Markets fell overnight as weak manufacturing data raised the risk of a recession occurring in the US,” said ANZ economists Susan Kilsby and Michael Callaghan.
US President Donald Trump blamed the Federal Reserve. “As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected,” he tweeted.
The kiwi may also have found some support when the global dairy commodity price index strengthened slightly by 0.2 percent, with average prices reaching US$3,306 a tonne. Prices continued to hold above US$3000, as they have done so since the start of 2019.
Looking ahead, markets will now focus on US jobs data at the end of the week.
The kiwi traded at 93.09 Australian cents from 92.78 at 5.50pm. It was at 67.25 yen from 67.58 and at 4.4616 Chinese yuan from 4.4590 yuan. It traded at 57.07 euro cents from 57.32 cents and was at 50.76 British pence from 50.82 pence.
ends
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