NZ dollar gains vs greenback ahead of NZ poll, US CPI

Thursday 14th September 2017

The New Zealand dollar rose ahead of the latest opinion poll, with just over a week until the election, and before a report on US inflation.

The kiwi dollar was trading at 72.54 US cents as at 5pm in Wellington from 72.37 US cents as at 8am and from 72.87 cents late yesterday. The trade-weighted index was at 75.57 from 75.78.

Domestically traders are waiting to see if the latest 1News Colmar Brunton poll continues to show Labour ahead of National, in particular after this week's Newshub Reid Research poll showed the opposite. Potential moves in the US dollar, however, could have a bigger impact if it looks like US President Donald Trump may get a tax deal through and if there is any tick up in US inflation.

"The market is absolutely watching the poll. It got hosed on the back of the Newshub one," with the kiwi pushing immediately higher, said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. He said, however, if Trump does get a tax deal through it would be US dollar positive and "if we get a tick up in CPI, that would certainly put the cat amongst the pigeons." He noted that the market is "very short" US dollars as the greenback has come under significant pressure as expectations the US Federal Reserve will lift rates again this year have waned in the face weak price pressures.

The kiwi was trading at 90.53 Australian cents from 90.80 Australian cents late yesterday. Weak data out of China - including fixed-asset investment, factory output and retail sales - all weighed on the Aussie but a solid jobs report across the Tasman kept it firm. Australia added 54,200 new jobs in August and the unemployment rate was unchanged at a seasonally adjusted 5.6% in August. Economists surveyed ahead of the release had expected a steady jobless rate, predicting the economy would add 20,000 jobs in the month.

The kiwi was at 80.03 yen from 80.26 yen and 4.7413 yuan from 4.7543 yuan. The kiwi traded at 61.00 euro cents from 60.81 cents and at 54.87 British pence from 54.76 pence.

The two-year swap rate rose 3 basis point to 2.18 percent while 10-year swaps rose 5 basis points to 3.15 percent.

(BusinessDesk)

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