NZ dollar, little changed, may fall on Chinese data; stability report looms

Wednesday 11th November 2015

The New Zealand dollar may decline should key Chinese data releases today stoke concerns about slowing growth in Asia's largest economy.

The kiwi was little changed at 65.32 US cents at 8am in Wellington, from 65.31 cents at 5pm yesterday ahead of the US Veterans Day public holiday today. The trade-weighted index advanced to 71.46 from 71.35 yesterday.

The key focus for currency traders today will be a slew of data releases from China amid concern about the impact of slowing growth in Asia's powerhouse. Chinese data published yesterday showed inflation cooled more than expected in October, advancing 1.3 percent from a year earlier, lower than the 1.6 percent pace in September and the 1.5 percent forecast in a Reuters poll. Traders will be looking to see if that trend is also evident in Chinese data due out today on October retail sales, industrial production and fixed asset investment.

"Asian equities closed mostly in the red yesterday, influenced by soft Chinese inflation data. The October CPI print undershot expectations, albeit mostly driven by the volatile food component," Bank of New Zealand currency strategist Raiko Shareef said in a note. "Investors will be closely watching today’s retail sales, industrial production, and fixed asset investment data out of China. These will likely be the major cue for risk assets in Asia, and heading into the European session.

"A very soft reading could well see NZD break below 0.65."

In New Zealand today, the Reserve Bank publishes its bi-annual Financial Stability Report, where it is expected to provide an update on its concerns over inflated house prices in Auckland, a weaker dairy sector and global economic risks. The report is released at 9am, and Governor Graeme Wheeler will testify at a parliamentary select committee at 1pm.

The New Zealand dollar rose to 92.86 Australian cents from 92.56 cents yesterday after a report showed Australian business confidence weakened.

The local currency advanced to 60.93 euro cents from 60.75 cents yesterday ahead of a speech by European Central Bank president Mario Draghi in London.

It was little changed at 43.22 British pence from 43.21 pence yesterday, at 80.41 yen from 80.39 yen, and at 4.1545 yuan from 4.1537 yuan.

BusinessDesk.co.nz

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