NZ dollar extends gains after upbeat RBNZ, weaker US retail sales
The New Zealand dollar extended its gains overnight after the Reserve Bank's better-than-expected outlook for the local economy and as the greenback declined following weaker retail sales data.
The kiwi touched 74.42 US cents overnight, and was trading at 73.62 cents at 8am in Wellington, from 72.98 cents at 5pm yesterday and 71.84 cents immediately before yesterday's 9am Reserve Bank monetary policy statement. The trade-weighed index gained to 77.73 from 77.38 yesterday.
The New Zealand dollar jumped after Reserve Bank governor Graeme Wheeler yesterday kept the benchmark interest rate unchanged, and said rates could go up or down in the future as the local economy is in a healthier state and not in the same boat as other central banks that have cut rates this year. Helping the kiwi's gain overnight was a decline in the greenback from a 12-year high after US retail sales unexpectedly fell for a third month, raising doubts the Federal Reserve would increase interest rates in June.
"The New Zealand dollar remained strong after the RBNZ emphasised New Zealand was in a different situation to other countries," ANZ Bank New Zealand senior rates strategist David Croy and senior FX strategist Sam Tuck said in a note. "Overnight weakness in US retail sales added to New Zealand dollar strength."
ANZ expects the kiwi to trade between 73 US cents and 74.50 cents today.
In New Zealand today, traders will be eyeing the release of the BNZ-Business NZ performance of manufacturing index for a gauge of manufacturing activity in February after the measure fell to a two-year low in January.
The New Zealand dollar slipped to 95.77 Australian cents from 96.10 cents yesterday, was little changed at 69.45 euro cents from 69.50 cents, gained to 49.57 British pence from 48.90 pence and increased to 89.33 yen from 88.77 yen.