NZ dollar weakens as Chinese manufacturing gauge shows contraction
The New Zealand dollar touched a fresh four-year low at the weekend on concern about a slower outlook for the Chinese economy, Asia's largest and New Zealand's biggest trading partner.
The kiwi touched 72.13 US cents, its lowest since March 2011. It was trading at 72.37 US cents at 8am in Wellington, from 72.58 cents at the New York close and 72.80 cents at 5pm in Wellington on Friday. The trade-weighted index slipped to 75.31 from 75.54 on Friday.
The New Zealand dollar, already weakened following the Reserve Bank's move to a neutral bias from a tightening bias last week, declined further over the weekend following the release of Chinese manufacturing data which signalled the first contraction in more than two years. The Chinese government's purchasing managers' index fell to 49.8 in January from 50.1 in December and below the 50.2 expected.
"Expect further downside for the New Zealand dollar off the back of the weekend Chinese January Manufacturing PMI release which dipped below the 50 level," ANZ Bank New Zealand senior economist Mark Smith said in a note.
The kiwi will probably trade between 72 US cents and 72.90 cents today, according to ANZ.
Today, traders will be eyeing the final print of HSBC's China Manufacturing PMI for January, while tonight the monthly US ISM survey is scheduled for release.
The New Zealand dollar was little changed at 93.53 Australian cents from 93.48 cents on Friday ahead of the Reserve Bank of Australia's decision on interest rates tomorrow. Some economists are predicting a cut to rates at the meeting while others expect the RBA to first reduce the benchmark rate in March.
The local currency slipped to 64.07 euro cents from 64.27 cents on Friday, weakened to 48.01 British pence from 48.30 pence and dropped to 84.93 yen from 85.91 yen.