WSJ:New Zealand Dollar Down Late, Weighed by HSBC China PMI
WELLINGTON--The New Zealand dollar was lower late Thursday after disappointing HSBC China purchasing managers index data pared gains made in early trading on better-than-expected second-quarter domestic growth data.
Western Union Business Solutions Corporate Dealing Manager Chris Hunter said the Kiwi had been drifting lower since the release of the PMI data, although recent divergence seen between the HSBC and official Chinese PMI data was diluting the impact of the HSBC release somewhat.
HSBC said Thursday that its preliminary China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, rose slightly to 47.8 in September compared with a final reading of 47.6 in August, but remained well below the key expansionary threshold of 50. That could further stoke market concerns over the continued slowdown in the world's second-largest economy.
Earlier in the trading day, the New Zealand dollar had received a boost against both the greenback and the Australian dollar, due to data from Statistics New Zealand that showed the country had experienced better-than-expected growth in the second quarter.
The statistics agency said seasonally adjusted gross domestic product rose 0.6% on quarter in the three months to June 30, after expanding 1.0% in the first quarter. The figure was above the median forecast of 0.3% growth in a Wall Street Journal poll of 11 economists.
Also Thursday, incoming Reserve Bank of New Zealand Gov. Graeme Wheeler and Minister of Finance Bill English signed a new Policy Targets Agreement, which sets out specific targets for maintaining price stability, and which, unlike previous agreements, requires the central bank to focus on keeping future average inflation near 2%.
Markets are currently digesting the implications of the changes to the agreement, which is negotiated whenever there is a new RBNZ governor. Mr. Wheeler assumes office on Sept. 26, replacing Alan Bollard.
New Zealand government bonds moved higher, tracking the Australian market, a local trader said. He added that bond prices had fallen after the GDP data but that those moves had been erased in the afternoon session.
