Article – BusinessDesk
Jul. 31 (BusinessDesk) – The New Zealand dollar pared its decline from an eight-week low after failing to break below key support levels as traders await US labour market data due overnight Friday local time, which may provide clues to the timing of interest …
NZ dollar gains vs. AUD as greenback strengthens
By Jonathan Underhill
Jul. 31 (BusinessDesk) – The New Zealand dollar pared its decline from an eight-week low after failing to break below key support levels as traders await US labour market data due overnight Friday local time, which may provide clues to the timing of interest rate hikes in the world’s biggest economy.
The kiwi traded at 85.06 US cents at 5pm in Wellington, from 84.83 cents at 8am and from 85.10 cents late yesterday. The trade-weighted index rose to 79.71 from 79.53 yesterday.
Figures due for release on Friday in the US are expected to show the US economy added 233,000 jobs in July, according to a Reuters survey, after stacking on 288,000 the previous month. Some economists say a number above 200,000 points to growth in the economy. The US Federal Reserve’s Open Market Committee’s policy statement yesterday repeated that the US central bank sees slack in the labour market and traders will likely take a strong number as a sign the Fed is closer to raising interest rates from near zero. The US dollar index, which measures the greenback against a basket of currencies, is near its highest in 10 months.
“Another strong number will get the market into thinking we’ve had moderately good data for a while. At some point the Fed is going to give a signal of a rate hike,” said Imre Speizer, senior market strategist at Westpac Banking Corp. The kiwi has had “a very sharp fall. There’s probably a bit of profit-taking from people who went short on the way down.”
There is “very strong support” for the kiwi at 84 US cents, he said.
The New Zealand dollar had declined 3.3 percent this month on weaker-than-expected inflation and commodity prices and following Reserve Bank hints it may intervene to pull down the kiwi after signalling a pause in its hiking cycle. Data released by the Reserve Bank yesterday showed it sold just $2 million of local currency in the month of June.
The New Zealand dollar rose to 91.24 Australian cents from 90.66 cents yesterday.
“The Reserve Bank will be quite happy that the US dollar is stronger across the board,” Kelleher said. “The kiwi is probably relatively fair value at the moment but we can move, with further US dollar strength, back towards the bottom end of the ranges again.”
The kiwi traded at 63.48 euro cents from 63.45 cents yesterday and rose to 50.25 British pence from 50.22 pence. It was at 87.38 yen from 86.87 yen.