NZ dollar back above 99 cents Aussie, reigniting parity talk

Photo / Brett Phibbs

The New Zealand dollar jumped half a cent against the Australian dollar, moving above 99 Australian cents and sparking renewed speculation of parity, after weaker Chinese economic data weighed on the Australian dollar.

The kiwi rose as high as 99.11 Australian cents, from 98.51 cents immediately before China released economic activity indicators for March, which were weaker than expected, at 2pm New Zealand time.

It recently traded at 99.07 Australian cents.

The Australian dollar dropped after the Chinese data release, which raised concerns about the outlook for Australian hard commodity exports to Asia's largest economy.

While Chinese first-quarter growth of 7 percent met expectations, March data for factory output, fixed-asset investment and retail sales all lagged behind expectations.

"Bad China data is always going to hurt Aussie more than kiwi," said Imre Speizer, senior market strategist at Westpac Banking Corp in New Zealand, who said a bigger reaction may come during London trading overnight.

"We are within about a cent of parity now," Speizer said. "If we don't see parity tonight, it will be close to it."

The New Zealand dollar touched 99.78 Australian cents last week, its highest level since being allowed to trade freely in 1984.

If the kiwi doesn't break through A$1 tonight, it could reach the milestone should Australian employment data tomorrow print weaker than expected, he said.

Chinese data for March released today showed factory output climbed 5.6 per cent from the same month a year ago, lagging forecasts in a Reuters poll for a 6.9 per cent gain and signalling weaker demand for Australian hard commodity exports.

Chinese retail sales, now watched more closely as China becomes more of a consumer society, expanded 10.2 per cent, missing expectations for a 10.9 per cent gain.

Meanwhile fixed-asset investment advanced 13.5 per cent, lagging behind the 13.8 per cent forecast.

"It's all adding up to more signs of a slowing economy," said Westpac's Speizer.

China's economy is expected to grow 7 percent this year, the lowest in a quarter of a century.