NZ dollar pares decline at start of data-heavy week; Chinese manufacturing slows

Monday 1st July 2013

The New Zealand dollar pared losses in local trading as investors prepare for a new quarter in what's expected to be a data-heavy week, with central bank meetings and US employment figures.

The kiwi rose to 77.70 US cents at 5pm in Wellington from 77.23 cents at 8am and 77.38 cents on Friday in New York, having dropped as low as 77.01 cents. The trade-weighted index increased to 73.75 from 73.56 last week.

Traders are taking a cautious start to the week which includes central bank meetings in Australia, the UK and Europe, and will end with US jobs data, a key indicator for the US Federal Reserve. The July 4 Independence Day holiday on Thursday in the US may see some trading desks understaffed as people take a long weekend, and could lead to higher volatility going into the end of the week.

"With such a lot of data you're looking at the technical levels," said Alex Hill, head of dealing at HiFX in Auckland. "If we see the kiwi weaken to beneath 77 US cents by the end of the week, it does seem like 75 is on."

If the kiwi were to end the week above 78.50 US cents it may push higher, Hill said.

A BusinessDesk survey of nine strategists predicts the kiwi may trade between 75 US cents and 80 cents this week, with a lower bias. Five expect the kiwi to end lower, two expect a rise while two said it would remain steady.

Chinese manufacturing figures today showed a slowing of activity in the world's second-biggest economy, ahead of similar surveys in other major economies, including the US, Germany and Europe later this week.

The Reserve Bank of Australia is expected to keep its benchmark rate unchanged at 2.75 percent when it reviews monetary policy tomorrow. The kiwi traded at 84.60 Australian cents at 5pm in Wellington from 84.65 cents on Friday in New York.

HiFX's Hill said everyone wants to sell the Australian dollar, and there may be an opportunity for local importers to buy at 85 Australian cents if the RBA reiterates its view that there's room for another rate cut.

The local currency gained to 77.22 yen at 5pm in Wellington from 76.73 on Friday in New York, and gained to 59.64 euro cents from 59.47 cents. It increased to 51.04 British pence from 50.86 pence last week.

BusinessDesk.co.nz

Comments from our readers

No comments yet