NZ dollar eases on shade cast by record Aussie retail sales

The kiwi was trading at 64.18 US cents at 5pm in Wellington. Photo / File

The New Zealand dollar looks headed for a slightly weaker finish for the week, cast into the shade by surprisingly strong Australian retail sales.

The kiwi was trading at 64.18 US cents at 5pm in Wellington from 64.47 cents at the same time yesterday and from 64.49 cents in New York last Friday. The trade-weighted index was at 71.25 from 71.39.

The Australian data showed retail sales rose 16.3 per cent in May, the largest ever increase in the 38-year history of the Australian Bureau of Statistics' retail data series.

The easing of lockdown restrictions across the Tasman saw spending at clothing retailers more than double, with big increases in footwear and personal accessory sales as well as a lift in dining out.

However, the increase followed the record 17.7 per cent decline in April.

"We had some very good retail sales out of Australia," which pushed the Aussie up against the kiwi, said Michael Johnston, a dealer at XE.

The market's focus will remain on equities markets, which are higher today, but still weighed down by fears about rising numbers of covid-19 cases in some of the larger US states including California, Texas and Florida as well as this week's outbreak in Beijing.

Of late, the kiwi's progress has had a strong correlation with the US stock market, Johnston said.

Domestically, the market is starting to look ahead to next Wednesday's statement from the Reserve Bank about monetary policy.

"The big picture is three months ago we were down at 55 US cents and we've screamed higher since," Johnston said, adding that he wouldn't be surprised to see the currency ease further.

Reserve Bank governor Adrian Orr "would probably like to see this kiwi come off a bit. I think there's quite a good chance we will see him talking about the kiwi" and wanting the currency to help exporters a little more than it has, he said.

The New Zealand dollar was trading at 93.60 Australian cents from 93.69 late yesterday, at 51.65 British pence from 51.33 pence, at 57.24 euro cents from 57.25 cents, at 68.59 yen from 68.87 yen and 4.5491 Chinese yuan from 4.5480 yuan.

The bid price on the two-year swap was at 0.1850 per cent from 0.2100 per cent, while the 10-year swap was at 0.7225 per cent from 0.7200 per cent yesterday.