Article – BusinessDesk
May 6 (BusinessDesk) The New Zealand dollar touched a fresh three-week high overnight in a quiet holiday session and is expected to trade in a narrow range ahead of the release of local data.
NZ dollar gains as traders await data on employment, dairy prices
By Tina Morrison
May 6 (BusinessDesk) – The New Zealand dollar touched a fresh three-week high overnight in a quiet holiday session and is expected to trade in a narrow range ahead of the release of local data.
The kiwi touched 86.86 US cents early this morning, and was trading at 86.77 cents at 8am in Wellington, from 86.57 cents at 5pm yesterday. The trade-weighted index increased to 80.63 from 80.42 yesterday.
Markets in the UK and Japan were closed yesterday and traders are waiting on upcoming releases for further direction. Overnight, the US April ISM non-manufacturing index rose to an eight-month high, signalling the world’s largest economy continues to improve. Traders are keeping an eye on tensions in the Ukraine with an expectation a resolution could take some time.
“The currencies are a little bit becalmed at the moment,” said Stuart Ive, senior advisor at OMF. “Better figures coming out of the US add a little bit of confidence and a little bit of risk gets put on and hence the small gains you are seeing in the kiwi. We are really consolidating at these upper levels at the moment and waiting for bigger news, we do have a lot of data coming out in the latter part of the week.”
New Zealand employment data tomorrow is expected to show the unemployment rate dipped below 6 percent in the first quarter for the first time in five years.
“Those sorts of things will just underline the kiwi for the time being,” said OMF’s Ive. “There’s nothing really shaking the boat here at the moment – we are steady as she goes until we really see some momentum in either the Ukraine situation or when we get local data that could drive us.”
Early tomorrow morning traders will be eyeing prices in the latest GlobalDairyTrade auction and a speech by Reserve Bank governor Graeme Wheeler on the significance of dairy to the New Zealand economy.
Today, the kiwi will likely trade in a tight range between 86.60 US cents and 87.10 cents, Ive said.
The New Zealand dollar advanced to 93.57 Australian cents from 93.42 cents yesterday ahead of March trade data at 1:30pm New Zealand time, and the Reserve Bank of Australia interest rate decision at 4:30pm. The bank is expected to keep rates unchanged and maintain its neutral bias.
The kiwi gained to 62.54 euro cents from 62.38 cents after the European Commission predicted low inflation will remain a threat to euro-area expansion for at least the next two years as it trimmed its economic growth forecast and warned of the impact of tensions with Russia.
The local currency rose to 51.44 British pence from 51.30 pence while the London market was closed for the May Day bank holiday. The kiwi increased to 88.65 yen from 88.23 yen as Japanese banks were closed in observance of Children’s Day yesterday and for Greenery Day today.