NZ dollar advances as some investors see declines as good buying
The New Zealand dollar advanced as some investors bet its decline made it attractive buying.
The kiwi rose to 78.74 US cents at 8am in Wellington, from 78.41 cents at 5pm yesterday. The trade-weighted index gained to 78.26 from 78.06 yesterday.
The New Zealand dollar has fallen about 11 percent from its peak in July amid concerns that falling dairy prices will weigh on farmer incomes and crimp economic growth, at the same time as increased optimism about a US recovery boosts demand for the greenback. Some analysts say that while the longer-term trend is for the kiwi to decline, investors who follow technical charts are seeing it as attractive buying at these levels.
"It does look very much more like a technical move rather than anything fundamental," said Stuart Ive, a senior dealer of foreign exchange at OMF. "The technical pattern on the kiwi going back over the last 12 hours does suggest that we may see a little bit of further push to the upside, maybe even up to 79, where we would expect to see sellers coming into the market.
"Anything with a 79 handle on will attract sellers and for the time being we seem to have some support come through around the 78.30 area," Ive said.
In New Zealand today, data on credit card spending is scheduled for publication at 3pm.
The New Zealand dollar edged lower to 91.09 Australian cents from 91.15 cents yesterday ahead of a speech by the Reserve Bank of Australia's head of economic analysis department, Alex Heath, at the NSW Mining Industry and Suppliers Conference in Sydney.
The local currency advanced to 62.74 euro cents from 62.51 cents yesterday after Eurozone economic data printed weaker than expected. Markit's Composite Flash Purchasing Managers' Index, based on surveys of thousands of companies and seen as a good growth indicator, fell to 51.4, lagging expectations for 52.3. A PMI covering the dominant service industry also missed all predictions in the poll by falling to 51.3, while the factory PMI's dip to 50.4.
Meanwhile, manufacturing activity in Germany, the bloc's largest economy, slid to the cusp of contraction. Markit's PMI recorded a value of 50.0, down from 51.4 in October and a two-month low. A reading of 50 marks the dividing line between contraction and expansion.
The kiwi gained to 92.84 yen from 92.79 yen yesterday and rose to 50.15 British pence from 50.02 pence.