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Kiwi climbs as US and Chinese data beat expectations

Monday 2nd August 2010

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The New Zealand dollar held above 72 US cents as better-than-expected American data lifted sentiment on Friday in New York, while more expansion among Chinese manufacturers stoked investors’ appetite for riskier, or higher-yielding, assets.  

US manufacturing and consumer confidence helped stocks on Wall Street pare losses on Friday, with the Dow Jones Industrial Average little changed on the day. American share markets declined earlier in the session after data showed the world’s biggest economy grew at a slower-than-expected annualised 2.4% in the three months through June.

China’s production manufacturing index stayed in expansionary territory, allaying fears of a slowdown among Asian economies, and underpinning early support for growth sensitive currencies such as the kiwi in early trading today.  

“China’s MPI wasn’t as bad as people had feared, and is responsible for the slight bid-tone for the Aussie and kiwi,” said Imre Speizer, market strategist at Westpac.

“Global direction isn’t compelling, with US equities looking vulnerable, but commodities looking quite tasty” which is giving markets mixed signals, he said.  

The kiwi climbed to 72.53 US cents from 71.94 cents on Friday in New York and gained to 67.37 on the trade-weighted index of major trading partners’ currencies from 67.09. It rose to 62.60 yen from 62.10 yen last week, and slipped to 80.05 Australian cents from 80.17 cents. It edged up to 55.0 euro cents from 55.42 cents last week, and was unchanged at 46.22 pence.  

Speizer said the currency may trade between 72 US cents and 73 cents today, with little local event risk until Thursday’s household labour force survey. The kiwi will probably get sold on rallies around 73 cents, he said.  

Today’s ANZ Commodity Price Index will probably eased last month after Fonterra’s online auction price for milk powder slumped 14% last month. The globaDairyTrade website will hold an auction on Tuesday in the US and prices will probably come in “slightly weaker” after July’s fall, Speizer said.

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