Tuesday 20th March 2012
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The New Zealand dollar rose to a three week on signs the local economy is picking up pace and after a Federal Reserve official suggested the US recovery is becoming “more established”.
The New Zealand dollar rose as high as 82.87 cents overnight from 82.59 cents yesterday at 5pm. It traded at 82.63 US cents at 8.30 am.
New Zealand data continues to show the local economy is on track with the Westpac McDermott Miller Consumer Confidence Index rising 1.1 points to 102.4 in the first three months of the year.
The Bank of New Zealand Business NZ Performance of Services Index recorded its highest February reading since the survey began in 2007, rising 1.7 points to 55.5 points. Investors are picking slow but respectable economic growth when gross domestic product for the three months ended Dec. 31 is released on Thursday.
A Reuters’ surveys of 11 economists expect GDP to have grown 0.6 percent, slowing from a pace of 0.8 percent in the September quarter. The slowdown is attributed to a drop in manufacturing, offset by strong farming output and improving retail trade and construction.
“There is still reasonable demand for the kiwi against most of the crosses,” said Alex Sinton, senior dealer at ANZ New Zealand. “In the US there would have to be some pretty strong economic data to effect things.”
In the US, the world’s largest economy, homebuilder sentiment was unchanged in March holding at its best level since June 2007. Federal Reserve Bank of New York President William Dudley said risks to the US economy recovery still remain as oil prices continue to rise and the housing market remains sluggish.
Dudley reaffirmed the Fed’s March 13 statement that the central bank will keep interest rates low until the end of 2014.
US Treasuries continued their slide with the US 10 years widening 8 bases points to a yield of 2.38 percent.
New Zealand 10 year government bonds rose 2.5 base points to 4.310 percent.
The New Zealand dollar was little-changed on 77.85 Australian cents from 77.89 cents yesterday after Reserve Bank of Australia Governor Glenn Stevens delivered a speech on the state of the economy in Hong Kong, and gave an upbeat account of China’s outlook. The RBA releases the minutes from its March meeting today.
The New Zealand dollar fell to 62.39 euro cents from 62.7 cents and slipped to 52.01 British pence from 52.17 pence. The kiwi declined to 68.81 from 68.95.
The trade-weighted index decreased to 73.46 from 73.53.
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