NZ dollar stays in tight range as global equity markets rally

Friday 28th December 2018

The New Zealand dollar remained in a tight range as investors flocked back into equity markets following Wall Street's recovery, where strong consumer spending buoyed retail stocks.

The kiwi traded at 67.19 US cents as at 5pm in Wellington, largely unchanged from 67.17 cents at 8.30am and 67.24 cents yesterday. The trade-weighted index fell to 73.57 from 73.76 yesterday.

Stocks across Asia rose, with Japan's Topix up 4.8 percent in afternoon trading, following on from a 5 percent gain on Wall Street's Dow Jones Industrial Average, its biggest ever one-day increase on a points basis. Investors were unnerved on Christmas Eve after US Treasury Secretary Steven Mnuchin made the unusual statement that he'd sought assurances from bank executives that their institutions were sound, however strong retail sales figures from Mastercard helped calm those fears. Meanwhile, White House economic adviser Kevin Hassett played down recent presidential criticisms of Federal Reserve chair Jerome Powell, saying the central banker's job isn't in jeopardy.

"We're coming up to the end of the calendar year and it's a little bit quieter," said Paul Webber, foreign exchange manager at OMF. "I'm a little surprised the kiwi drifted lower today - we had quite a big bounce in US equities."

Webber said he expects the kiwi will remain within its recent range of 67.20-67.60 US cents for the rest of the week.

The kiwi fell to 95.16 Australian cents from 95.54 cents yesterday, and rose to 74.52 yen from 74.15 yen. It traded at 59.02 euro cents from 59.17 cents yesterday, and was at 53.07 British pence from 53.19 pence. The local currency traded at 4.6296 Chinese yuan from 4.6301 yuan yesterday.

New Zealand's two-year swap rate rose 1 basis point to 1.98 percent and 10-year swaps were up 1 basis point at 2.68 percent. (BusinessDesk)

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