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Dollar may gain with retail data

Wednesday 14th April 2010

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The New Zealand dollar, little changed, may gain with retail sales figures today after spending on credit and debit cards jumped more than expected last month.

Retail sales for February, released by Statistics New Zealand today, were flat, based on a Reuters survey. Still, figures for card spending in March, which were released yesterday, showed the biggest increase in 28 months, a sign that the retail sector may be reviving as the economy recovers.

Some economists have pushed back their pick for the timing of interest rate hikes by the Reserve Bank to the third quarter, based on the economy’s tepid revival.

Shares on Wall Street edged up as Intel Corp. posted first-quarter earnings and a second-quarter sales forecast that beat estimates, lifting optimism as the US earnings season gets underway. Meantime, Greece’s sale of 1.56 billion euros of treasury bills met strong demand, buying time for the debt-laden nation.

“Today’s retail trade figures look set to be the highlight of this week’s batch of household sector data,” said Mike Jones, market strategist at bank of New Zealand, in a note.

The Greek debt sale helped lift risk appetite overnight, bolstering the euro and the kiwi, though the greenback subsequently revived amid reports that Federal Reserve chairman Ben Bernanke will deliver hawkish testimony to the Joint Economic Committee of Congress, Jones said.

The kiwi dollar traded at 71.28 US cents, from 71.24 cents in late trading yesterday. It edged up to 66.45 yen from 66.33 yen and weakened to 76.75 Australian cents from 77 cents. It was at 52.38 against the euro from 52.49 yesterday and traded at 46.35 British pence from 46.30 pence.The trade-weighted index, or TWI, was little changed at 65.93 from 65.96.

The New Zealand dollar may trade in a range of 70.88 US cents to 71.68 cents today, according to ANZ economist Mark Smith.

“Local data today could well surprise to the topside despite anecdotal evidence that may suggest otherwise,” he said.

The value of electronic point of sale transactions across all industries rose a seasonally adjusted 1.2% last month, after falling 0.4% in February, according to Statistics New Zealand figures yesterday. The data follows figures from Paymark, which processes more than 75% of all electronic transactions in New Zealand, showing a 4.8% increase in spending last month.

Investors are weighing the pace of economic recovery to determine the likelihood the Reserve Bank Governor Alan Bollard will lift the official cash rate from a record low 2.5% around mid-year, as he has stated, or prefer to wait.

ANZ’s Smith said traders also have China on their radar amid speculation Beijing will allow the yuan to strengthen. New York University economist Nouriel Roubini told Bloomberg that China will allow its currency to appreciate gradually, “possibly as early as May”.

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