NZ dollar claws back some of RBNZ-induced slide, falls vs. pound

Friday 15th March 2013

The New Zealand dollar clawed back some of yesterday's central bank-induced slide ahead of manufacturing data today while falling against the pound as some traders deemed Britain's currency oversold.

The kiwi dollar rose to 82.12 US cents from 81.78 cents at 5pm in Wellington yesterday. It was as high as 82.61 cents before the central bank's monetary policy statement yesterday, which included a warning interest rates may have to be cut if the kiwi keeps gaining. It fell to 54.44 British pence from 54.72 pence.

The BNZ-Business New Zealand Performance of Manufacturing Index for February is out today and follows a jump the previous month to the strongest since May last year. Economists expect manufacturing continued to expand in the latest month though will be looking for any drought impact. Meanwhile the pound strengthened against most currencies after Bank of England governor Mervyn King gave an optimistic view of that nation's growth outlook.

"Sterling was very oversold," said Tim Kelleher, head of institutional FX sales at ASB Institutional. "It had gone a long way very fast."

The New Zealand dollar may trade in a range of 81.85 US cents to 82.30 cents today, he said.

The kiwi rose to 79.14 Australian cents from 78.84 cents, having sold off yesterday following stronger than expected Australian employment numbers. Kelleher said there has been some talk the jobs data contained statistic errors, while iron ore prices continued their slide.

That "may temper enthusiasm for the Aussie and the kiwi may drift of as well," he said.

The New Zealand dollar rose to 78.93 yen from 78.38 yen and traded at 63.14 euro cents from 63.11 cents.

The trade-weighted index rose to 75.56 from 75.33.

BusinessDesk.co.nz

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