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NZ dollar holds gains after upbeat Chinese trade, US jobs growth misses optimistic forecasts

Monday 9th December 2013

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The New Zealand dollar held gains in local trading after figures on the weekend showed China lifted exports by more than expected last month, and after strong US jobs growth on Friday undershot optimistic forecasts by some traders.

The kiwi traded at 82.91 US cents at 5pm in Wellington from 82.82 at 8am and 81.96 cents on Friday in New York. The trade-weighted index was 77.83 from 77.77 at the New York close.

Investors rallied behind the trans-Tasman currencies after government figures showed China's trade surplus widened to US$33.8 billion in November, the biggest since January 2009, indicating the world's second-biggest economy may recover from a brief slowdown earlier this year.

Traders were already chasing risk-sensitive assets after figures on Friday showing strong US jobs growth fell short of overly optimistic expectations, which could have prompted the Federal Reserve to start scaling back its asset purchase programme as early as this month.

"There was a little bit of positioning (after the US jobs data) at an illiquid time of the year, and we also saw some good data out of China over the weekend," said Michael Johnston, senior trader at HiFX in Auckland. "We still favour selling the kiwi into rallies."

New Zealand figures today showed the country's property values rose at a 9.2 percent annual pace in November, accelerating from its 8.9 percent pace a month earlier, according to Quotable Value.

Bubbling property markets in the country's two biggest cities, Auckland and Christchurch, prompted the Reserve Bank to impose loan restrictions on low equity mortgage lending from October, and governor Graeme Wheeler is expected to speak on the impact of that policy at Thursday's policy meeting.

Wheeler is predicted to keep the benchmark rate on hold at 2.5 percent, and while he has signalled rates will probably rise next year, the strength of the currency may limit the pace and scale of any tightening.

Traders will be eyeing Chinese industrial production and retail sales tomorrow for another gauge on how the nation's economy is tracking.

A BusinessDesk survey of 11 traders and strategists predicts the kiwi will trade between 80.80 US cents and 84.50 cents this week. Nine expect the currency to advance while two say it may drop.

The local currency climbed to 85.23 yen at 5pm in Wellington from 85.19 yen on Friday in New York, and traded at 90.98 Australian cents from 90.96 cents. It was little changed at 60.49 euro cents from 60.41 cents last week, and increased to 50.74 British pence from 50.64 pence.

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