NZ dollar advances as weaker US data weighs on greenback

Published: Tue 22 Dec 2015 08:42 AM
NZ dollar advances as weaker US data weighs on greenback
By Tina Morrison
Dec. 22 (BusinessDesk) - The New Zealand dollar advanced in light trading heading into the Christmas holiday period, after weaker US economic data weighed on the greenback.
The kiwi rose to 67.67 US cents at 8am in Wellington, from 67.49 cents at 5pm yesterday. The trade-weighted index gained to 73.73 from 73.56 yesterday.
The US dollar index, which measures the greenback against a basket of currencies, slid after data from the Chicago Federal Reserve suggested the US economy grew at a below average pace in November before the Federal Reserve raised interest rates last week. That follows weaker-than-expected data in the US service and manufacturing industries, reinforcing that future interest rate hikes in the world's largest economy will be gradual.
"NZD/USD is grinding higher as US data under-performs," ANZ Bank New Zealand senior economist Mark Smith and senior foreign exchange strategist Sam Tuck said in a note. "There is little out in Asia to drive markets, who will instead look to the US data overnight to see if the softer trend continues. Risks for NZD remain to the topside."
The kiwi will probably trade between 67.30 US cents and 68.20 cents today, ANZ said.
In the US tonight, the final estimate of third-quarter gross domestic product is expected to show the US economy grew at a 1.9 percent annualised pace, according to a Bloomberg survey. Data on existing home sales and the Richmond Fed manufacturing index are also scheduled for release in the US.
Financial markets will shut early on Thursday, and are closed on Friday.
The New Zealand dollar rose to 4.3845 yuan from 4.3725 yuan yesterday amid speculation that further monetary stimulus may be on the cards for the world’s second-largest economy. A statement released overnight from Chinese government officials following the conclusion of the Central Economic Work Conference suggested that monetary policy must be more flexible while fiscal policy becomes more forceful.
The kiwi gained to 45.48 British pence from 45.25 pence yesterday, advanced to 81.98 yen from 81.82 yen, edged up to 94.21 Australian cents from 94.18 cents, and was little changed at 62.03 euro cents from 62.09 cents.

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