Wednesday 4th September 2019
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The New Zealand dollar rebounded from multi-year lows after US manufacturing data disappointed.
The kiwi was trading at 63.33 US cents at 8am in Wellington, up from 62.83 cents at 5pm. The trade-weighted index was at 70.86 from 70.52.
The greenback “took a pummelling” when the Institute for Supply Management’s manufacturing index fell to 49.1 percent in August from 51.2 percent in July, Kiwibank trader Mike Shirley said.
Any reading below 50 percent indicates a contraction in activity. The August reading was the lowest reading since January 2016. Economists surveyed by the Wall Street Journal had forecast the ISM factory index to slip to 51.0.
Comments in the survey “reflect a notable decrease in business confidence,” the ISM said.
The kiwi was also helped by remarks by Finance Minister Grant Robertson who talked up the strength of the New Zealand economy on Bloomberg TV.
“The fundamentals of our economy remain strong,” he said. Nor did he expect unconventional monetary policy tools would be required here.
"I don't see that happening in the short term in New Zealand. There's still a little bit more room to move in terms of monetary policy in New Zealand and my belief is that the economy will respond to not only the monetary policy work that's been done but also the fiscal policy.
“The Minister of Finance’s comments on the New Zealand economy and unconventional monetary policy helped stem the currency’s decline,” said ANZ FX/rates strategist Sandeep Parekh.
The kiwi was also supported when global dairy prices fell less than expected, particularly whole milk powder, in the overnight auction. Whole milk powder fell 0.8 percent to US$3,076 a tonne while the GDT price index fell 0.4 percent. ASB Bank had tipped whole milk powder to fall 1 percent.
The New Zealand dollar was trading at 93.63 Australian cents from 93.65, at 52.38 British pence from 52.20, at 57.70 euro cents from 57.43, at 67.15 yen from 66.79 and at 4.5448 Chinese yuan from 4.5123.
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