NZ dollar falls to two-month low as positive US economic data boosts greenback

Wednesday 27th May 2015

The New Zealand dollar fell to a two month low as upbeat US economic data reinforced expectations the Federal Reserve will hike interest rates this year, boosting demand for the greenback.

The kiwi touched 72.15 US cents, and was trading at 72.18 cents at 8am in Wellington, from 73.13 cents at 5pm yesterday. The trade weighted index dropped to 75.60 from 76.15 yesterday.

The dollar index, which measures the greenback against a basket of currencies, touched a month high following a string of generally positive US data overnight. Reports showed US core capital goods orders rose 1 percent in April, ahead of the 0.3 percent expected, as the March figure was revised higher, while measures of consumer confidence, house prices and house sales also improved.

"The US dollar found a solid bid as markets found reasons to be optimistic from the latest US data dump," ANZ Bank New Zealand senior economist Philip Borkin and senior FX strategist Sam Tuck said in a note. The latest data supports the theory that the US economy will bounce in the second quarter, following a weaker first quarter, ANZ said.

ANZ expects the kiwi to trade between 71.60 US cents and 73.40 cents today.

In New Zealand today, traders will be awaiting the outcome of Fonterra Cooperative Group's board meeting. The world's largest dairy exporter is expected to provide its first payout forecast for the upcoming season tomorrow morning. Analysts have been pulling back their expectations for the season as prices for dairy products, the country's largest commodity export, haven't rebounded as soon as expected.

The New Zealand dollar was little changed at 93.33 Australian cents from 93.36 cents yesterday, fell to 66.37 euro cents from 66.85 cents, dropped to 46.91 British pence from 47.32 pence and declined to 88.84 yen from 89.11 yen.

BusinessDesk.co.nz

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