Thursday 17th January 2019
|Text too small?|
The New Zealand dollar weakened amid mixed signals on the local economy and as investors grow more positive on the prospects for a less-painful departure for the UK from the European Union.
The kiwi was trading at 67.60 US cents at 5pm, from 67.81 cents this morning and 68.11 cents late yesterday. It was at 52.50 British pence from 52.71 pence this morning and from 53 pence this time yesterday. The trade-weighted index was at 73.20 from 73.68 last night.
UK Prime Minister Theresa May this morning saw off a no-confidence vote in her government – as expected – just as a report showed New Zealand house sales in December were the lowest for that month in seven years.
Mike Shirley, senior dealer with Kiwibank, said there had been no initial reaction to the housing data, which should not have been a surprise.
A 20-point drop in the kiwi early this afternoon had no fundamental driver and was more a reflection of thin liquidity triggering stop-loss selling.
He said the kiwi continues to be driven by major events like Brexit, the global growth outlook and China-US trade relations. The lack of reaction to the strong dairy prices in Tuesday night’s GlobalDairyTrade auction was evidence of that.
”We’re very much a cork on a very big sea of volatility,” he said.
“The kiwi will continue to be driven by offshore headlines and events.”
Marshall Gittler, chief strategist at ACLS Global, was also surprised by the weakness of the kiwi, given the strong dairy auction result and yesterday’s record 560 billion yuan injection by China’s central bank to ensure liquidity ahead of January tax payments and the Lunar New Year holidays starting next month.
He noted that pound’s strong performance, on the hope that renewed consultations by Prime Minister Theresa May and a little more time improves the prospects for a solution that reduces the risk of Britain crashing out of the EU without an agreement on March 29.
“The flaw in that reasoning, from my point of view, is that there is no solution agreeable to all MPs, and certainly not one that’s agreeable both to the British and all the EU countries,” he said in a client note.
Kiwibank’s Shirley said issues like Brexit and China-US relations are not going away and there has been “a little bit of a shift in favour from the kiwi and aussie across to the yen.”
The US government shutdown will get more focus the longer it goes on. Non-farm payroll data due on Feb. 1, if published, will capture the furloughed federal workers as unemployed, and will tend to skew the data, he said.
Against the Australian dollar, the kiwi was at 94.31cents, from 94.68 cents late yesterday. It eased to 73.60 Japanese yen, from 73.92, 59.34 euro cents, from 59.72, and to 4.5729 Chinese yuan from 4.6109.
No comments yet
MARKET CLOSE: NZ shares dip as global trade jitters weigh on A2, F&P
NZ dollar set for weekly gain after Reserve Bank surprise
Burger Fuel exploring sale after review questions listing merits
New net migration data to remain rubbery for quite some time
NZX to push sales this year after reshaping business dents 2018 profit
Slowing new orders growth weighs on January PMI
New NZ dry dock a basis for new industry - KiwiRail
Wellington Drive beats 2H sales forecast, will meet earnings guidance
NZIQS decides more training is the answer to past president's misconduct
February 15th Morning Report