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NZ dollar lifts against yen; buoyed by improved US data

Friday 30th August 2019

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The New Zealand dollar gained against the Japanese yen and held around a four-year low against the greenback as investor concerns about a slowing US economy eased.

The kiwi was trading at 67.24 yen at 7:50 am in Wellington from 66.79 yen at 5pm. It was at 63.12 US cents from 63.05 cents and the trade-weighted index was at 70.55 from 70.53.

Risk appetite got a lift from signs of strong consumer spending in the US helping shore up the economy.

Real gross domestic product increased at an annual rate of 2 percent in the second estimate of second-quarter GDP, down from a prior estimate of 2.1 percent, the US department of commerce said. However, growth in consumer spending, which accounts for more than two-thirds of US economic activity, surged at a 4.7 percent rate in the quarter, Reuters reported. That was the fastest since the fourth quarter of 2014.

“The background to consumption remains very strong and is now supported by lower interest rates,” said ANZ economist Michael Callaghan.

US President Donald Trump used the strong data as an opportunity to lobby the Federal Reserve for even lower interest rates.

“The Economy is doing GREAT, with tremendous upside potential! If the Fed would do what they should, we are a Rocket upward!” he tweeted.

Yesterday, Mary Daly, president and chief executive officer of the Federal Reserve Bank of San Francisco, said politics are never on the US Fed’s agenda.

“You literally walk across the threshold of the FOMC meeting room and when we walk in and we start our deliberations, politics never comes up. They never come up. We never discuss them,” she told journalists in Wellington.

While the kiwi strengthened against the safe-haven yen, deteriorating business confidence kept it under pressure against the greenback. Yesterday's ANZ Bank business outlook survey found a net 52.3 percent of respondents expect deteriorating business conditions in the coming year, up from 44.3 percent a month ago.

Overall, the kiwi “had a volatile night but ended near fresh lows, weighed down by the very weak ANZ Business Outlook and USD strength,” Callaghan said.

Today’s ANZ-Roy Morgan Consumer Confidence survey will be closely watched to see how domestic consumers are feeling.

The New Zealand dollar was trading at 93.79 Australian cents from 93.74, at 51.81 British pence from 51.66, at 57.09 euro cents from 56.88 and at 4.5089 Chinese yuan from 4.5183.


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