NZ dollar gains after US retail sales growth, earnings

Tuesday 16th October 2012

The New Zealand dollar rose after US retail sales growth and Citigroup's earnings beat estimates, lifting stocks on Wall Street and bolstering risk appetite and demand for growth-linked assets such as the kiwi.

The kiwi dollar rose to 81.82 US cents from 81.43 cents at 5 pm yesterday. The trade-weighted index rose to 73.07 from 72.80.

Shares of Citigroup gained after the bank's third-quarter profit beat expectations, giving investors some comfort about the current earnings season, while US retail sales rose 1.1 per cent in September, beating estimates. Data in New Zealand today is expected to show the consumer price index rose at an annual pace of 1.1 percent, low enough to stay the central bank's arm on interest rates. Across the Tasman, minutes of the last Reserve Bank of Australia meeting are due out later today.

"Most, including us, expect NZ inflation to track higher over the coming year," said Mike Jones, strategist at Bank of New Zealand, which is forecasting inflation slowed to 0.9 percent, the lowest since 1960. "An outcome around our expectations would only reinforce the market's inclination to price in RBNZ rate cuts."

The third quarter is likely to be the last with such low inflation. The central bank has the annual pace speeding to 1.9 percent in the fourth quarter.

The kiwi dollar rose to 64.39 yen from 63.87 yen yesterday and gained to 63.16 euro cents from 63.08 cents. It slipped to 79.66 Australian cents from 79.81 cents and rose to 50.90 British pence from 50.74 pence.

BusinessDesk.co.nz

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