NZ dollar holds gains as US data weakens

By Rebecca Howard

May 27 (BusinessDesk) - The New Zealand dollar held its gains after weak US data overnight Friday offered further evidence that the world's biggest economy is slowing.

The kiwi was trading at 65.53 at 8am in Wellington versus 65.51 US cents late Friday in New York and 65.16 US cents at 5pm Friday in Wellington. The trade-weighted index was unchanged at 72.15.

The greenback was weighed after US durable goods orders came in marginally weaker than expected, with headline orders falling by 2.1 percent in April. The March reading was also revised down from an increase of 2.6 percent to 1.7 percent.

"The weakness of the April durable goods data, which showed underlying orders unchanged following a downwardly-revised plunge in March, provides further evidence that economic growth is slowing sharply," said Capital Economics.

"The data point towards continued moderation in growth and adds credence to the Fed’s decision to be patient," said ANZ FX/rates strategist Sandeep Parekh.

The kiwi was at 51.40 British pence versus 51.32 late Friday in New York after news that US Prime Minister Theresa May has resigned.

"After a substantial effort to deliver a deal in Parliament and oversee Britain’s exit from the EU, Prime Minister May surrendered to rising tensions within the Conservative Party amidst growing calls for her resignation saying she had 'done her best,'" said Parekh. She will remain Conservative Party leader until June 7, after which Britain will need to find a new leader to guide them through Brexit. Parekh expects more volatility as a hunt for a new leader begins.

This week the domestic focus will be on the central bank's twice-yearly financial stability report Wednesday followed by the government's budget on Thursday. Offshore headlines on the US-China trade spat will continue to dominate.

The New Zealand dollar was trading at 94.42 Australian cents from 94.24, at 58.48 euro cents from 58.31, at 71.66 yen from 71.36 and at 4.5214 Chinese yuan from 4.5062.

© Scoop Media