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NZ dollar gains vs Aussie on weak trade data, rises against greenback

Friday 5th January 2018

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The New Zealand dollar edged up against the Australian dollar after weaker-than-expected November trade data across the Tasman. 

The kiwi rose to 91.08 Australian cents as at 5pm in Wellington from 90.59 cents late yesterday. It rose to 71.58 US cents from 70.97 cents yesterday.

The Aussie came under some pressure when data from the Australian Bureau of Statistics showed a seasonally adjusted deficit of $628 million in November, well below the $550 million surplus that had been expected by economists.

"It was a bit disappointing ...for the next GDP read it probably means there is some downside risk," said Chris Weston, chief market strategist at IG Markets. "There's a bit of strength in the kiwi and it is certainly outperforming the Aussie," he said. 

The kiwi is also benefitting as the US dollar remains out of favour, he said. "Risk taking is quite abundant," said Weston.  The trend in the kiwi is higher for now but "the big question in the macro landscape at the moment is where to for the US dollar?" There were asset managers running large short US dollar positions - betting the greenback will continue to wane and Weston said he doesn't expect them to change their positioning until real yields start moving higher. "As long as real yields are staying low, then money is going to flow into high beta currencies and also emerging market currencies."

Markets will be watching for US jobs data later today but Weston is not expecting fireworks. The report is expected to show that nonfarm payrolls rose by 190,000 jobs in December, according to separate polls by Bloomberg and Reuters. 

The trade-weighted index climbed to 74.29 from 73.87.

The kiwi dollar rose to 52.75 British pence from 52.49 pence yesterday and gained to 59.26 euro cents from 59.05 cents and rose to 80.75 yen from 79.94 yen and traded at 4.6385 yuan from 4.6177 yuan.

New Zealand’s two-year swap rate fell 2 basis points to 2.17 while the 10-year swap fell 2 basis points to 3.12 percent.

(BusinessDesk)

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