WELLINGTON: The New Zealand dollar bounced from a four-month low against the Australian dollar as some investors found the levels attractive after a sharp sell-off last week. The kiwi rose to 93.92 Australian cents as at 5pm in Wellington from 93.55 Australian cents at 8am and 93.66 cents in late New York trading on Friday.
New Zealand’s currency was still 1.2 percent lower against its trans-Tasman counterpart from a week earlier as rising commodity prices and a rosier economic outlook from the Reserve Bank of Australia stoked demand for the Aussie dollar.
“After such a hard sell-off last week, it’s not surprising it’s attracted some buying interest at these levels,” said OMF private client manager Stuart Ive.
The New Zealand dollar fell sharply last week after New Zealand’s central bank indicated rates would remain on hold for some time to come. The kiwi traded at 72 US cents from 71.99 cents on Friday in the US and Ive said it was likely to stick to a 71.70-to-72.20 US cent range until there were some catalysts to move it one way or the other. It was at 78.51 on a trade-weighted index basis versus 78.37 on Friday.
Ive said local traders largely overlooked news that retail spending rose a seasonally adjusted 2.7 percent in January after two months of zero movement, the biggest monthly gain since December 2006, with increases across all six industries and said Tuesday’s food price index data was unlikely to have much impact.
The light data calendar means investors will continue to watch headlines out of the US for direction, and Ive there may be some signs that US President Donald Trump is “toning down” his rhetoric, which could be positive for risk. Any detail on Trump’s tax-plan is also likely to shore up the greenback.
