NZ dollar gains on weak US manufacturing, greenback falls

Photo / Dean Purcell

The New Zealand dollar rose against the greenback after a weaker-than-expected Texas manufacturing outlook survey sapped upward momentum from strong US consumer data and took the wind out of recent gains in America's currency.

The Federal Reserve Bank of Texas' latest manufacturing outlook survey showed business conditions in the southern US state slowed in March despite production increasing.

That raised fears about the sustainability of the recovery, with the state home to a number of major semiconductor manufacturers and exporters.

The data took some of the steam out of US consumer confidence numbers which showed households in the world's largest economy spent more in February that originally forecast, and the Dollar Index, a measure of the greenback against a basket of six currencies, fell 0.2 per cent to 76.14.

"It has been quite volatile in overnight session, driven by data in the US," said Khoon Goh, head of market economics & strategy at ANZ New Zealand. "The New Zealand dollar traded in a small range relative to the big moves in the last few weeks, and was is consolidation mode."

The kiwi rose to 75.24 US cents from 75.20 cents yesterday, and was little changed at 65.97 on the trade-weighted index of major trading partners' currencies from 65.96.

It gained to 73.23 Australian cents from 73.11 cents yesterday, and recently traded at 61.45 yen from 61.44 yen. It fell to 53.37 euro cents from 53.50 cents yesterday, and rose to 47.02 pence from 46.97 pence previously.

European Central Bank President Jean-Claude Trichet helped bolster support for so-called risk-sensitive currencies, saying inappropriate monetary policy may push inflation rates beyond the region's annual 2 per cent level. That reaffirmed expectations the ECB will begin tightening policy when it meets next month.

The Australian dollar tested highs against the US currency again in the session, reaching A$1.0301 against the greenback before falling back to A$1.027.

"For investors chasing yield, there is no better currency than the Australian dollar right now," Goh said. The kiwi dollar may trade between a range of 75.05 US cents and 75.75 cents today, he said.