NZ dollar rises against weak Australian dollar

File photo / NZH

The New Zealand dollar rose against the Australian dollar today when it came under pressure in the wake of weaker than expected retail sales data.

Otherwise it was a fairly quiet session in which the NZ dollar held its own in a market where risk aversion was reduced.

A solid result at last night's Fonterra auction, with dairy prices up 1.6 per cent, was said to have relatively little impact on trading.

By 5pm the NZ dollar was at A77.91c, up from A77.47c at 8am and A77.59c at 5pm yesterday.

It was at US75.08c at 5pm from US74.95c at 8am and US74.28c at 5pm yesterday.

The Australian dollar fell to be US96.35c at 5pm from US95.77c at the same time yesterday.

Australian retail sales dropped 1.1 per cent in October, which was the biggest monthly fall in 15 months and was weaker than expectations of a 0.3 per cent rise.

The weak number implied the Australian economy may not be expanding as quickly as thought as household consumption is a driver of growth.

Asian equity markets were firm today and the eruo held near recent highs on hopes the European Central Bank (ECB) may take bold steps to ease the region's debt crisis.

The ECB is expected to keep interest rates unchanged in an announcement due tonight, and possibly announce the extension of crisis support measures beyond their expiration in mid-January.

But some market participants think the ECB could disappoint the market given the well-publicised conflict within the bank about buying bonds. That could prompt a resumption of the euro's sell-off in fairly short order, analysts said.

The NZ dollar was at 0.5728 euro at 5pm from 0.5713 euro at 8am, after reaching a 2-1/2-month high around 0.5735 euro 24 hours earlier.

The NZ dollar was also up to 63.12 yen from 62.09, after touching a one-month low around 61.85 yen during early afternoon trading yesterday.

BNZ currency strategist Mike Jones said that investors had focused on the positives on a swathe of upbeat manufacturing data out of China, Europe, Britain and the United States.

Recovering risk appetite and rising commodity prices bolstered demand for growth-sensitive currencies such as the NZ dollar, at the expense of safe haven currencies such as the US dollar and the yen, Mr Jones said.

The trade weighted index rose to 68.48 at 5pm from 67.93 yesterday.

- NZPA