WSJ: NZ Dollar Up Late Amid US Dollar Weakness; Bonds Mixed
WELLINGTON (Dow Jones)--The New Zealand dollar was higher Monday on general weakness in the U.S. dollar, following Friday's downward revision of U.S. gross domestic product data.
The downward revision of U.S. first-quarter GDP to 2.7%, from 3.0%, weighed on the U.S. dollar and benefited the kiwi, Westpac Senior Market Strategist Imre Speizer said.
BNZ Forex Strategist Mike Jones said while the New Zealand dollar had strengthened to US$0.7157 overnight, the local unit gave up some of its gains following the release of the National Bank of New Zealand's Business Outlook survey.
The survey showed a net 40.2% of respondents expect conditions to improve over the next 12 months, compared with a net 48.2% in the May survey. Net confidence is defined as the percentage of optimists minus that of pessimists.
"The headlines certainly portend softer business confidence this month relative to last month. It's not surprising since we've had the first Reserve Bank (of New Zealand) interest rate hike and more and more bad news coming out of Europe," he said.
Jones added there has been a bit of speculative interest to buy the Australian dollar in favor of the kiwi.
"The kiwi, Australian dollar has increased quite a lot over the last week and so there has been a little bit of interest to sell it here today," he said.
Jones said a statement from the Group of 20 meeting over the weekend released earlier Monday had little impact on the New Zealand dollar and the market is now focused on the slew of U.S. data, including non-farm payrolls, due out later in the week.
"We suspect the fortunes of the New Zealand dollar will rest with offshore markets this week. In particular, a slew of important U.S. data releases will shed light on whether recent fears over the strength of the U.S. recovery are justified," he said.
He said he wouldn't rule out a move toward US$0.7250 in the coming sessions should fears over the U.S. recovery continue to undermine the U.S. dollar.
New Zealand government bonds ended mixed on a general lack of interest, a local bond trader said, adding that interest rate swaps closed lower following the release of the business confidence survey.
"We have flattened up a bit and we have received interest in the five-year (interest rate swaps)," he said.
-By Lucy Craymer, Dow Jones Newswires; 64-4-471-5990; lucy.craymer@dowjones.com
