NZ dollar climbs back over US72c

The NZ dollar got a lift from strong retail sales data today but it did not last for long as the US dollar surged to a four-month high after China reported strong fourth quarter growth.

The NZ dollar rose about 30 points from US71.90c to US72.30c after Statistics New Zealand said both total sales, and core retail sales which exclude vehicle-related industries, rose a seasonally adjusted 0.8 per cent in November.

The rises beat expectations, with the median forecasts in a Reuters poll of economists being a 0.5 per cent rise in overall retail sales and a 0.2 per cent rise in core retail.

But economists warned that the rises reflected some unusually big bounces in just a few categories and may not be sustainable.

The NZ dollar retreated and was US72.09c at 5pm from US71.93c at 8am and US72.95c at 5pm yesterday.

Murray Hindley, chief currency dealer at ANZ, said yesterday's weaker than expected inflation data and risk aversion were still affecting the NZ dollar.

It had support at US71.70c after breaking down lower yesterday. Resistance was currently around US72.35c.

China's economy expanded 10.9 per cent between October and December, which was lower than expected but the data reinforced fears that China will continue to take measures to cool its overheating economy.

News on Wednesday that some Chinese banks have been instructed to curb lending weighed on commodity currencies like the NZ dollar.

BNZ Capital strategist Mike Jones said the NZ dollar had been hit by a perfect storm of negative news in the 24 hours to 8am today. It had been the weakest performing currency among the majors, falling almost 3 per cent - the largest daily drop since November.

The NZ dollar was at 65.83 yen at 5pm from 66.56 yen yesterday and at A79.01c from A79.47c.

The trade weighted index was 65.83 at 5pm from 66.34 yesterday.

- NZPA