NZ dollar weighed by positive US manufacturing data, eyes on QSBO, RBA

Tuesday 2nd April 2019

The New Zealand dollar was slightly weaker against the greenback after some positive US manufacturing data but remains above 68 cents as risk appetite picks up.

The Kiwi was trading at 68.10 US cents at 8am in Wellington from 68.22 US cents at 5pm yesterday. The trade-weighed index was at 73.86 from 73.98.

The US dollar got a lift when the Institute for Supply Management said its manufacturing index rose to 55.3 in March from 54.2 in the previous month. Economists surveyed by The Wall Street Journal had expected a 54.4 reading for March.

'Better-than-expected US data helped ease fears about the US growth outlook, for the moment, while the rebound in China’s manufacturing data continued to ripple across global markets," said ANZ Fx/rates strategist Sandeep Parekh. Markets were already cheered by Chinese March official manufacturing PMI, which came in at 50.5 points from 49.2 in February.

Looking ahead, Parekh said today's New Zealand Institute of Economic Research’s latest quarterly survey of business opinion will be closely for any further signs capacity pressures are waning, plus a read on gross domestic product into 2019.

The other key event today will be the outcome of the Reserve Bank of Australia's meeting this afternoon, followed by the Aussie budget. The RBA is widely expected to keep rates on hold but the commentary will be closely scrutinized to see whether the RBA joins New Zealand's central bank in saying the next move could be a rate cut.

The kiwi was at 95.79 Australian cents from 95.87 cents late yesterday. It was at 75.82 Japanese yen from 75.78, at 4.5696 Chinese yuan from 4.5752.

Brexit volatility also continues and the kiwi was trading at 51.87 British pence from 52.35 as " sterling rallied on renewed hopes of a soft Brexit as MPs look set to vote again in attempt to break the current political deadlock," said Parekh.

According to the BBC, MPs are debating four options including a customs union, which is a trade agreement under which two or more countries do not put tariffs on goods coming in from other countries in the union.

The kiwi was at 60.74 euro cents from 60.75.

(BusinessDesk)

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