Soft Chinese manufacturing data keeps a lid on kiwi dollar

Wednesday 31st October 2018

The New Zealand dollar continued to struggle against the greenback after soft manufacturing data out of China raised concerns about a slowdown in this country's largest trading partner.

The kiwi traded at 65.42 US cents at 5 pm in Wellington from 65.50 US cents at 8 am and 65.46 cents yesterday. The trade-weighted index was at 72.07 from 72.03.

China's official Purchasing Managers’ Index fell to 50.2 in October, the lowest since July 2016 and down from 50.8 in September. "The latest survey data point towards a further loss of momentum at the start of Q4," Capital Economics said in a note, adding that it was below expectations.

The kiwi "got knocked by that Chinese data" which may also have been pushed around by a Chinese holiday, said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

Xinhua, China's state-run press agency, quoted senior statistician Zhao Qinghe saying the manufacturing supply and demand in October experienced "fluctuations due to factors including the National Day holiday and a complicated external environment."

The kiwi was largely unchanged against the Australian dollar. It traded at 92.31 Australian cents from 92.33 yesterday after Australian consumer prices remained tepid in the third quarter.

Data from the Australian Bureau of Statistics showed the headline consumer price index rose 0.4 percent quarter-on-quarter in the September quarter. Market reaction, however, was fairly muted as the data was in-line with forecasts.

The kiwi rose to 57.67 euro cents from 57.50 cents yesterday and traded at 4.5575 Chinese yuan from 4.5603 yuan yesterday. It traded at 74.06 yen from 73.72 yen after the Bank of Japan kept its ultra-easy monetary policy in place as concerns grow about the impact of US-China trade tensions on the Japanese economy.

The board voted 7-2 to maintain short-term interest rates at minus 0.1 percent and the target for the 10-year Japanese government bond yield at around zero, according to Dow Jones Newswires.

The local currency rose to 51.49 British pence from 51.11 pence yesterday.

New Zealand's two-year swap rate rose 1 basis point to 2.00 percent; the 10-year swaps rose 4 basis points to 2.82 percent.

(BusinessDesk)

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