Sharechat Logo

NZ dollar gains after stronger retail sales data driven by automobiles

Monday 15th May 2017

Text too small?

The New Zealand dollar rose after figures showed a stronger-than-expected gain in first-quarter retail sales, led by vehicles, but is expected to remain in its recent range until this week's dairy auction



The kiwi rose to 68.73 US cents as at 5pm in Wellington from 68.55 cents in late New York trading on Friday. The trade-weighted index edged up to 74.88 from 74.68, below the RBNZ's latest projected average for the TWI in the June quarter of 76.



Retail sales rose 1.5 percent, seasonally adjusted, in the first quarter, accelerating from a 0.9 percent pace three months earlier, government figures showed. That exceeded the 0.9 percent rate forecast by economists and saw the kiwi rise against the greenback and the Australian dollar. Sales of motor vehicles and parts climbed 5.9 percent in the first quarter. Traders are divided on whether dairy prices will rise for the fifth auction in a row this week, with the nearest NZX milk powder contract pointing to an increase but with weaker prices indicated by contracts further out along the curve.



Retail sales "were better than the market expected - that's what did it," said Martin Rudings, senior dealer at OMF. Still, "I suspect the kiwi will not move significantly until the dairy auction. We've seen a lot of selling in milk powder (futures) but the front contract has held up."



He said the market has dialled back its assessment of when the Reserve Bank will hike interest rates after last week's monetary policy statement unexpectedly left the track for the official cash rate little changed, and "that's going to cap the kiwi".



The kiwi didn't move much after the BusinessNZ-Bank of New Zealand performance of services index dropped 6 points to 52.8 in April, its lowest level since December 2012, which reflected the timing of school holidays and unseasonably wet weather. It also didn't show an immediate reaction to a speech by RBNZ assistant governor John McDermott in which he said the bank didn't have fortune tellers and could only base its assessments on the latest economic data available.



The kiwi rose to 53.25 British pence from 53.06 pence on Friday. The local currency gained to 62.86 euro cents from 62.66 cents and climbed to 77.91 yen from 77.65 yen. It was little changed at 92.85 Australian cents from 92.86 cents and rose to 4.7417 yuan from 4.7246 yuan. 



Two-year swap rates fell 1 basis point to 2.20 percent and 10-year swaps declined 3 basis points to 3.28 percent. 





  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
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 mixed after strong Australian employment data
Energy efficiency key to lowering cost of renewables push - EECA
Paper recycling costs rising 35% as export markets collapse
First Union leading rivals for biggest average pay claims, says bargaining firm
Fonterra to go coal-free 11 years ahead of schedule
Huawei committed to NZ even if govt doesn’t come around on spy fears
Mercury points to peaking gains as FY production drops 10%
Asset Plus sells Heinz Watties distribution centre for $29.1 mln
18th July 2019 Morning Report
COMMENT: RBNZ's key political omission in its bank capital proposals

IRG See IRG research reports