Kiwi gains as commodity fears ease

  • 20/01/2016
Kiwi gains as commodity fears ease

By Tina Morrison

The New Zealand dollar gained as Chinese economic data wasn't as bad as feared, improving sentiment about the outlook for commodities.

The kiwi increased to 64.87 US cents at 8am in Wellington, from 64.33 cents at 5pm on Tuesday. The trade-weighted index rose to 71.71 from 71.28.

Sentiment towards commodity-linked currencies improved after the latest Chinese data broadly met forecasts, allaying fears about the outlook for the global economy.

While China reported economic growth that was the most tepid in 25 years, it still expanded 6.9 percent last year, compared with 7.3 percent in 2014.

Meanwhile, the average price on the GlobalDairyTrade auction declined just 1.4 percent, a smaller fall than some had expected, helping support the kiwi.

"China's data dump was keenly anticipated by markets," BNZ's Jason Wong said, adding that the figures were better than some in the market had feared.

"Market sentiment has improved. The improved mood helped support commodity markets, with many showing some signs of recovery," Mr Wong said. "When we look at the currency leaderboard, the commodity currencies were the best performing."

In New Zealand, annual inflation data is expected to show consumer prices continued to track below the Reserve Bank's target band of between 1 percent and 3 percent in the December quarter.

Mr Wong said the release will be closely watched and has the potential to "cause ructions" in the currency and rates markets, as traders mull the impact on the Reserve Bank official cash rate.

The New Zealand dollar was little changed at 93.61 Australian cents from 93.68 cents, it rose to 45.70 British pence from 45.14 pence, touching a two-week high of 45.90 British pence after Bank of England governor Mark Carney said it wasn't the right time to raise rates.

The kiwi advanced to 76.20 yen from 75.57 yen, gained to 59.37 euro cents from 59.06 cents, and jumped to 4.2673 yuan from 4.2325 yuan.