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NZ dollar stuck in tight range; global sentiment the driver

Friday 16th August 2019

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The New Zealand dollar stuck to a tight range as ongoing trade concerns offset better-than-expected retail data in the US.

The kiwi was trading at 64.49 at 7:45am from 64.41 US cents at 5pm in Wellington. The trade-weighted index was at 71.72 points from 71.61.

“Financial markets remained on a defensive theme, as some better-than-expected data flow failed to offset ongoing trade concerns,” said ANZ senior economist Miles Workman.

US retail sales increased 0.7 percent last month after gaining 0.3 percent in June, the US Department of Commerce said. Economists had expected a 0.3 percent rise. The data helped temper worries of a possible US recession.

Any gains, however, were capped after China called the latest US tariffs a violation of accords reached by Presidents Donald Trump and Xi Jinping and vowed retaliation, according to Bloomberg.

Sentiment improved slightly when Chinese foreign ministry spokesperson Hua Chunying said “China holds a consistent and clear position on China-US trade talks. We hope the US can work in concert with China to implement the two presidents' consensus that was reached in Osaka.”

Today, the Bank of New Zealand-Business NZ performance of manufacturing index will be closely watched to see if it remains below the survey's long-term average of 53.4. In June, the index rose 0.9 points to a seasonally adjusted 51.3 from May. 

However, while the PMI data could drive near-term direction “global risk sentiment is likely to remain in the driver’s seat overall,” said Workman.

The kiwi was at 95.09 Australian cents from 94.96 Australian cents, recovering some of the ground it lost after better-than-expected Aussie job numbers weighed.

The New Zealand dollar was trading at 53.22 British pence from 53.42, at 57.83 euro cents from 57.77, at 68.38 yen from 68.22 and at 4.5354 Chinese yuan from 4.5271. 

(BusinessDesk)

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