NZ dollar little changed as traders await more evidence of pace of economic growth

Monday 15th August 2016

The New Zealand dollar was little changed, having briefly rallied on Friday in the US on weaker-than-expected US retail sales, as traders await more economic data in the domestic economy that would give a clue to the track of interest rates.

The kiwi dollar traded at 71.86 US cents as at 8am in Wellington, from 72 cents in late New York trading on Friday. The kiwi climbed as high as 72.53 US cents after figures showed little changed US retail sales for July against forecasts for a 0.4 percent gain. The trade-weighted index slipped to 76.15 from 76.30 at the end of last week.

The market will be watching a reading of the services sector due out today after the BNZ-BusinessNZ performance of manufacturing index fell 1.8 points to a seasonally adjusted 55.8 in July, extending an expansion that is being underpinned by the construction industry. Retail sales rose a stronger-than-expected 2.3 percent in the second quarter, seasonally adjusted, and the PSI today is also expected to remain in expansion mode.

"Until NZD’s growth story deteriorates or the USD finds more sustained support (which will require a better data signal than the latest retail sales figure), the NZD will remain a 'buy on dips' even with the RBNZ in the process of narrowing yield differentials," ANZ New Zealand senior economist Philip Borkin said in a note. "New Zealand’s growth story looks solid, particularly relative to many others. In that environment, it is hard to see the NZD falling far even with the RBNZ in the process of narrowing interest rate differentials."

The kiwi traded at 93.81 Australian cents from 94.12 cents in New York on Friday. It dropped to 4.7634 yuan from 4.7733 yuan and fell to 72.69 yen from 72.84 yen. The local currency declined to 55.56 British pence from 55.77 pence and slipped to 64.32 euro cents from 64.44 cents.

(BusinessDesk)

BusinessDesk.co.nz

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