NZ dollar gains as retailers lead stocks higher on Wall Street

Monday 16th November 2009

The New Zealand dollar gained as stocks on Wall Street pushed higher on better than expected results from retailers, despite data showing American consumer confidence is dwindling in the lead-up to Christmas.

Walt Disney Co. and retailer Abercrombie & Fitch beat analysts’ expectations on their fourth-quarter earnings, boosting retail stocks on Wall Street and underpinning investors’ appetite for higher-yielding, riskier assets.

The U.S. dollar declined after the Reuters/University of Michigan Survey of consumers showed confidence declined more than expected in this month to its lowest point in seven months.

The Dollar Index, a measure of the greenback against a basket of six trading partners, fell 0.1% to 75.28.

“Retail stocks drove equity markets higher on slightly better earnings and guidance, rather than the soft data,” said Philip Borkin, economist at ANZ National Bank. “Sentiment is broadly better for risk appetites, which is a key theme for the New Zealand dollar.”

The kiwi climbed to 74.29 U.S. cents from 73.86 cents on Friday in New York and advanced to 66.15 on the trade-weighted index, or TWI, a measure of the currency against a basket of five partners, from 65.65.

It increased to 66.61 yen from 66.28 yen last week and rose to 79.57 Australian cents from 79.18 cents. It gained to 49.85 euro cents from 49.38 cents on Friday and was up to 44.43 pence from 44.10. Borkin said the currency will probably trade between 73.80 U.S. cents and 74.70 cents as it continues to follow sentiment in equity markets.

Leaders of the Asia Pacific Economic Cooperation group stopped short of making any direct comment on currencies at their summit in Singapore, though U.S. President Barack Obama is due to meet with Chinese officials, where the strength of the renminbi and American trade protections are likely to be discussed.

The trade balance in the world’s largest economy widened 18.2% in September, the biggest jump in 10 years, as U.S. appetite for Chinese imports surged. The data stoked speculation the Federal Reserve will have to keep rates lower for longer, and investors will be closely watching chairman Ben Bernanke’s speech in the U.S. today for clues on the central bank’s policy.

Businesswire.co.nz

Comments from our readers

No comments yet