Sharechat Logo

NZ dollar slips as positive US economic data points to continued tapering in 2014

Friday 3rd January 2014

Text too small?

The New Zealand dollar weakened after positive US economic data reinforced expectations a reviving US economy will prompt the Federal Reserve to continue to pull back its monetary stimulus this year.

The kiwi slipped to 81.99 US cents at 8am in Wellington, from 82.28 cents at 5pm yesterday.

The Fed announced last month that it would start pulling back its US$85 billion of monthly bond purchases this month as it gains confidence about a revival in the world's largest economy. Supporting that view, reports yesterday showed a gauge of US factory activity held near a 2-1/2 year high, the number of Americans filing new claims for jobless benefits fell and construction spending hit its highest in nearly five years.

"It wasn't stellar data but it just continues the trend," said Stuart Ive, senior advisor at OMF. "That broad US dollar strength is on the belief that tapering is going to continue."

A Reuters poll of economists taken in mid-December forecast annualized first-quarter US economic growth of 2.5 percent, reaching 3 percent by year-end. But since then, economic data has tended to exceed forecasts, Reuters said.

Investors will closely watch a speech by Fed Chairman Ben Bernanke later today in Philadelphia for clues about the central bank's plans for further easing of its monthly bond-buying programme. The Fed plans this month to reduce the pace of bond purchases by US$10 billion to US$75 billion.

Also on the agenda today, China releases its official PMI non-manufacturing report for December at 2pm. Traders will be eyeing the report for signs of how Asia's largest economy is tracking. The previously monthly reading was 56, with a print above 50 indicating expansion.

The New Zealand dollar is benefiting from investors selling the euro and the sterling in favour of the kiwi and the Aussie, said OMF's Ive.

The local currency advanced to 59.98 euro cents from 59.76 cents yesterday and rose to 49.98 British pence from 49.60 pence.

The kiwi weakened to 91.89 Australian cents from 92.17 cents yesterday and dropped to 85.81 yen from 86.62 yen. Japanese banks are closed today for a four-day bank holiday.

BusinessDesk.co.nz

  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:

Govt eyes 2025 for farm-level emissions pricing, tests interim steps
Govt won't "die in a ditch" for 100% renewable target
NZ 2Q CPI +0.6% on quarter, +1.7% on year
NZ 2Q CPI +0.6% on quarter, +1.7% on year
16th July 2019 Morning Report
Suspect company faces liquidation after director dies
NZ dollar holds gains; focus on domestic inflation data
MARKET CLOSE: NZ shares slip as fears over slowing Chinese growth weigh; AMP slumps
NZ dollar rises after heartening Chinese data
Suspect company faces liquidation after director dies

IRG See IRG research reports