By Rebecca Howard
July 4 (BusinessDesk) - The New Zealand dollar firmed as more soft data out of the US added to expectations the Federal
Reserve will cut rates later this month.
The kiwi was trading at 67.04 US cents at 8am in Wellington versus 66.78 cents at 5pm. The trade-weighted index was at
73.18 from 72.97.
The ADP National Employment report - which comes ahead of monthly non-farm payrolls data on Friday - showed private
employers in the US added 102,000 jobs in June, below expectations of a 135,000 increase.
"The kiwi surged alongside its commodity currency peers as weaker than expected ADP employment data gives the market a
chance to ratchet up rate cuts in the US," ANZ FX/rates strategist Sandeep Parekh said. "Expect the kiwi to retain
momentum for now," he said. According to Parekh, it has support around 66.70 US cents and resistance at 67.60 US cents.
Other data was also soft. The US trade deficit reached US$55.5 billion in May, a five-month high. Imports rose 3.3
percent to US$266.2 billion while exports lifted 2 percent to US$210.6 billion. Meanwhile, new orders for manufactured
goods, down three of the past four months, decreased by $3.6 billion or 0.7 percent to US$493.6 billion in May, the US
Census Bureau said.
According to Reuters, traders see a 29.7 percent chance the Federal Reserve will cut borrowing costs by half a
percentage point at its July 30-31 policy meeting, up from 24 percent a week ago. A cut of at least a quarter percentage
point is considered a certainty.
Against that backdrop, the non-farm payrolls data overnight Friday will be keenly watched. They are expected to rise
160,000 in June following a 75,000 gain in May.
The kiwi was trading at 95.29 Australian cents versus 95.41 late yesterday and was at 53.28 British pence from 53.03. It
was at 59.43 euro cents from 59.14, at 72.31 yen from 71.85 and at 4.6114 Chinese yuan from 4.5970.
(BusinessDesk)
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