Dollar gains as Wall St revives; retail sales loom

Friday 15th May 2009

The New Zealand dollar gained as stocks on Wall Street halted a three-day decline, stoking investor appetite for high-yielding, or riskier assets.

The kiwi’s gain may be capped today, with retail sales figures expected to show consumers are closing their wallets to conserve cash.

Financial stocks rose in the US as the cost to borrow between banks eased to the lowest level in about two months. The London interbank offered rate, or Libor, fell about three basis points to 0.85% according to Bloomberg data. The Dow Jones Industrial Average gained 0.6%. New Zealand retail sales in April may have slipped 0.3%, according to a Reuters survey.

“Tough times in the retail sector will again likely be reflected in today's retail trade update,” said Danica Hampton, currency strategist at Bank of New Zealand.

“While recent NZ business surveys look to be coming back from the brink of complete collapse, it would seem premature to see this as the start of a trend toward genuine expansion, if any,” she said. “The surveys are still telling of a contracting economy, just less alarmingly so.”

The kiwi rose to 69.65 US cents from 59.26 cents yesterday, and increased to 57.11 yen from 56.49 yen. It slipped to 78.41 Australian cents from 78.80 cents, and gained to 43.72 euro cents from 43.58 cents.

Imre Speizer, currency strategist at Westpac Banking Corp, said the currency may trade between 58.60 US cents and 60 cents today. The kiwi’s currently at a turning point, and if it breaks either cap, it will indicate whether it will continue to fall or start to gain again, he said.

European Central Bank council members continued to show a united front today, with disagreements over asset purchases and the outlook for the region’s economy. First-quarter gross domestic product figures in German and the Eurozone are expected to show a deteriorating situation in Europe.

Businesswire.co.nz

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