NZ dollar weakens on softer Chinese data, upbeat US consumer reports

Monday 16th May 2016

The New Zealand dollar slid after softer economic data from China, the country's biggest export market, and increased demand for the greenback.

The kiwi declined to 67.53 US cents at 8am in Wellington, from 67.72 cents at the New York close and 68 cents on Friday. The trade-weighted index sank to 72.48 from 72.75 on Friday.

The kiwi weakened as demand increased for the US dollar on optimism about consumer sentiment in the world's largest economy after data on Friday which showed US retail sales in April beat expectations and the University of Michigan consumer confidence survey improved. The local currency was hit further after reports from China on Saturday raised concerns about slowing growth in that nation's economy with measures of investment, factory output and retail sales all expanding at a more tepid pace than expected in April.

"The kiwi starts the week on the back foot," ANZ Bank New Zealand senior economist Philip Borkin and senior foreign exchange strategist Sam Tuck said in a note. "In an environment where it was already pushing lower courtesy of a pick-up in US data, softer Chinese activity data over the weekend will likely see support levels tested early on."

ANZ expects the kiwi to trade between 66.80 US cents and 68.40 cents today.

The BNZ-BusinessNZ Performance of Services Index is due out at 10:30am.

The New Zealand dollar was little changed at 93.11 Australian cents from 93.16 cents on Friday, at 47.07 British pence from 47.08 pence, and at 59.73 euro cents from 59.79 cents. The kiwi slid to 73.34 yen from 74 yen, and dropped to 4.4087 yuan from 4.4337 yuan.

BusinessDesk.co.nz

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