Kiwi climbs above US70c amid upbeat outlook on American retail sales

Thursday 8th July 2010

The New Zealand dollar climbed above 70 US cents for the first time in a week as stocks on Wall Street jumped on an upbeat outlook for US retail sales and a bullish forecast by State Street Corp.

The Standard & Poor’s 500 Index surged 3.1%, led by retailers, after the International Council of Shopping Centres said American retail sales probably grew at a monthly rate of 4% in the first five months of the retail fiscal year ahead of its June report tomorrow. That helped bolster investor confidence, which was already on the up after it was reported the Committee of European Banking Supervisors will perform softer stress tests of the region’s lenders than earlier expected. The kiwi dollar climbed 2.1% as investors returned to higher-yielding, or riskier, assets.

“The outfit that does the retail sales in the States came out early with the data, which was pretty good, and all retailers were up” on the New York Stock Exchange, said Tim Kelleher, vice president of institutional banking and markets at Commonwealth Bank of Australia.

“The kiwi has a slight upside bias to it today” after the upbeat session in New York, he said.

The kiwi jumped to 70.40 US cents from 68.98 cents yesterday, and rose to 66.88 on the trade-weighted index of major partners’ currencies from 65.93. It increased to 61.78 yen from 60.12 yen yesterday, and declined to 81.35 Australian cents from 81.51 cents. It advanced to 55.71 euro cents from 54.86 cents yesterday, and gained to 46.31 pence from 45.65 pence.

Kelleher said the currency may trade between 70.10 US cents and 70.60 cents today with Australian employment data the major risk event in the region.

The Bank of England and European Central Bank review their benchmark interest rates today in Europe, and are both expected to keep rates on hold. While the ECD isn’t likely to make any new statements, investors will be looking to see what the BoE has to say with a new administration slashing spending and lifting taxes.

Also on the radar locally will be the release of the Treasury’s advice on the New Zealand government’s budget, including the debt programme which will introduce inflation-indexed bonds.

Businesswire.co.nz

Comments from our readers

No comments yet