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NZ dollar, little changed, could push higher on strong retail sales figures

Friday 12th March 2010

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New Zealand’s dollar, hovering around 70 US cents, may rise if January retail sales figures prove stronger than market pundits are expecting.

Westpac Banking senior markets strategist Imre Speizer said retail sales may have lifted more than market consensus, which may add to pressure on the Reserve Bank to raise the cash rate earlier than its stated mid-year target, which Governor Alan Bollard reiterated yesterday. A higher cash rate would attract more buyers to the kiwi.

Overnight, the dollar traded was little changed against most major currencies, having fallen back from Wednesday’s five-week high when it was heading towards 71 cents. News out of China that year on year inflation of 2.7% may force a monetary tightening by its government wasn’t enough to drive the kiwi lower. The local currency will trade in a range of 69.60 cents to 71 cents pending major news either locally or offshore to set its direction, Speizer said.

“Seventy cents is a bit of a magnet at the moment,” he said. “We’ve noticed the turning points and resistance levels, and until there’s a significant event there won’t be a breakthrough.”

The kiwi was at 70.09 US cents from 69.80 late yesterday and against the pound finished at 0.4650 from 0.4672 overnight. It rose to 76.50 Australian cents from 76.35, and against the yen to 63.42 from 63.12. Against the Euro it was virtually unchanged at 0.5122 from 0.5121.

The TWI rose to 64.69 from 64.58.

Businesswire.co.nz

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