Sharechat Logo

NZ dollar mixed on contradictory Oz data, gloomy central banks

Thursday 7th March 2019

Text too small?

The New Zealand dollar was mixed after poor retail sales data in Australia were offset by surprisingly strong trade data. The Bank of Canada also joined the ranks of central banks noting signs of a weaker-than-expected economy.

The kiwi was trading at 67.84 US cents at 5pm in Wellington from 67.71 at 8am and at 96.31 Australian cents from 96.38.

The Australia data showed retail sales rose 0.1 percent in January, below the 0.3 percent  lift the market had expected, but that country’s trade balance in January was A$4.55 billion, well above the A$2.75 billion expected and the thirteenth successive month of surpluses.

That suggests the trade war between the United States and China, and the slowing Chinese economy, have yet to impact Australia’s exports.

Bank of Canada governor Stephen Poloz says the slowdown in global economic growth has been “more pronounced and widespread” than it forecast in January.Although he had expected Canada’s economy would stumble, he said the fall in the December quarter was sharper and more broadly based than he had expected.

Tim Kelleher, head of institutional foreign exchange sales at ASB Bank, says the market’s looking a little short at current levels and that there’s reasonable demand for New Zealand dollars from exporters.

“We’re just in a holding pattern at the lower end of the range,” he says.

While the Australian market has become gloomier and more economists are forecasting rate cuts, indications from the Reserve Bank of Australia are more upbeat.

“Until you see employment falling off a cliff, you’re not going to see much action from the RBA,” Kelleher says. Australia’s unemployment rate stands at 5 percent, a little higher than New Zealand’s at 4.3 percent.

While the market is getting more certain that rate cuts in Australia are coming, traders are less certain about rate cuts in New Zealand. Kelleher says the market currently is pricing in 16 basis points of a cut, which normally would be 25 basis points.

The European Central Bank will meet overnight New Zealand time and is expected to lower its growth forecasts.

The New Zealand dollar was trading at 51.45 British pence from 51.41, at 60 euro cents from 59.87, at 75.77 yen from 75.65 and at 4.5511 Chinese yuan from 4.5426. The trade-weighted index was at 73.67 points from 73.58.

The two-year swap rate ended the day at 1.8294 percent from 1.8230 on Wednesday; the 10-year rate was at 2.4150 percent from 2.4450.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar eases as US-China trade war, Brexit saga drag on
OceanaGold less confident in regulatory regime
INFINZ says RBNZ bank capital proposals lack analysis and scrutiny
Spark scolded for misleading customers on broadband price hike
Zespri annual profit jumps 77% on higher kiwifruit sales, increased licensing
Freightways says express package growth slowed in 2H, may flow into FY2020
BUDGET 2019: NZ debt target to be more flexible from 2022
Argosy annual profit climbs 36% on revaluation gains, pays slightly bigger dividend
NZ-owned banks says RBNZ capital proposals will make it harder to compete
Sanford earnings hit by vessel impact from crew death

IRG See IRG research reports