Story image

NZ dollar tumbles after weak Chinese trade data points to demand drop

13 Apr 15

The New Zealand dollar tumbled after figures showed China's exports unexpectedly fell while its imports recorded a bigger decline than forecast, signalling weaker demand for commodities in the fastest-growing major economy.

The kiwi fell to 74.47 US cents from 75.22 cents at the start of the day and from 75.71 cents in Wellington on Friday. the trade-weighted index fell to 78.61 from 79.39 on Friday.

China's exports declined 14.6 percent in March from a year ago, according to government figures, against expectations of a 12 percent increase, while imports fell 12.3 percent, beating the forecast 11.7 percent drop. The figures stoked concern about demand in the biggest market for products such as milk powder and the Australian dollar also dived as traders pondered the impact on shipments of iron ore and coal. The data comes ahead of the latest GlobalDairyTrade auction this week, which is expected to show another decline in prices.

"A poor number for the Chinese economy has a direct onset to commodity currencies and the consumption of commodities in China," said Alex Hill, head of corporate FX at NZForex. He said the sell-off may be limited because investors are more focussed on US data due this week for clues on interest rate movements in the world's biggest economy.

The US will publish March data for retail sales, industrial production, housing starts and inflation this week while the European Central Bank releases its latest policy decision on Wednesday. Australia has business and consumer confidence surveys this week, alongside inflation expectations and March employment data.

The kiwi may trade between 73.85 US cents and 77 cents this week, according to a BusinessDesk survey of 13 currency advisers and strategists. Seven expect the currency to decline, two bet it will rise, while four say it will remain little changed.

The GDT auction this Thursday may yield weaker prices as Fonterra Cooperative Group offers more product volume amid weaker demand, with whole milk powder futures suggesting a 5 percent decline for the current contract. Fonterra, the world's largest dairy exporter, last week said it would offer 9.5 percent more whole milk powder at this week's auction over contracts for delivery between June and October.

The kiwi traded at 70.39 euro cents, retreating from a record high 71.20 cents over the weekend and down from 70.89 cents on Friday. It traded at 98.23 Australian cents from 98.32 cents on Friday and fell to 89.81 yen from 91.23 yen. The kiwi fell to 51.05 British pence from 51.44 pence on Friday.

Report finds GCSB in compliance with NZ rights
The Inspector-General has given the GCSB its compliance tick of approval for the fourth year in a row.
Preparing for e-invoicing requirements
The New Zealand and Australian governments are working on a joint approach to create trans-Tasman standards to e-invoicing that’ll make it easier for businesses in both countries work with each other and across the globe
5c more per share: Trade Me bidding war heats up
Another bidder has entered the bidding arena as the potential sale of Trade Me kicks up a notch.
Hootsuite's five social trends marketers should take note of
These trends should keep marketers, customer experience leaders, social media professionals and executives awake at night.
Company-X celebrates ranking on Deloitte's Fast 500 Asia Pacific
Hamilton-based software firm Company-X has landed a spot on Deloitte Technology’s Fast 500 Asia Pacific 2018 ranking - for the second year in a row.
Entrepreneur reactivates business engagement in AU Super funds
10 million workers leave it up to employers to choose their Super fund for them – and the majority of employers are just as passive and unengaged at putting that fund to work.
Tether: The Kiwi startup fighting back against cold, damp homes
“Mould and mildew are the new asbestos. But unlike asbestos, detecting the presence – or conditions that encourage growth – of mould and mildew is nearly impossible."
Capitalising on exponential IT
"Exponential IT must be a way of life, not just an endpoint."