NZ dollar falls on weaker equities, poor China data

The domestic currency reached 64.54 US cents early on in the day's trading

The New Zealand dollar fell, tracking weaker equities markets and after data in China showed soft retail sales and a slower-than-expected pick-up in industrial production.

The kiwi was trading at 64.16 US cents at 5pm in Wellington compared with 64.49 cents in New York on Friday but little changed from 64.18 cents at the same time locally. The trade-weighted index was at 71.23 from 71.17.

The Chinese data showed May retail sales fell 2.8 per cent compared with the same month a year earlier. Economists had forecast a 2 per cent fall.

As well, industrial production rose 4.4 per cent in May from a year earlier after 3.9 per cent annualised growth in April. However, economists had expected a 5 per cent increase in May.

The data falling short of expectations reinforced a growing realisation in global markets that the recovery from the coronavirus-induced recession is probably going to be slow.

Last week, US markets refocused on the figures tracking the virus' spread, particularly noting the uptick of infections in large states such as Texas, Florida and California. There have also been fresh outbreaks in Beijing sourced to a major food market, prompting new lockdowns of nearby residential complexes.

"There was a reasonable amount of movement on the day," with the domestic currency hitting a high at 64.54 US cents early on and trading a range of almost 50 basis points, said Mike Shirley, a dealer at Kiwibank.

"That just looks like some chunky flows coming onto the market at a time when there wasn't much liquidity," as is usually the case on a Monday before the rest of the world wakes up, Shirley said.

"The fact that we've held above 64 US cents means either the market is waiting to see how the Northern Hemisphere reacts tonight or it's just in a bit of a holding pattern with 64-ish serving as an interim support."

The New Zealand, Australian and Asian equities markets have all been weaker today and the US equities futures are also pointing to a weaker session on Wall Street.

The kiwi traded at 94.02 Australian cents from 93.80 cents on Friday and at 51.25 British pence from 51.05 pence. It was at 56.97 euro cents from 56.82 cents, 68.67 yen from 68.76 yen and 4.5450 Chinese yuan from 4.5479 yuan.

The bid price on the two-year swap was 0.2100 per cent from 0.2250 per cent, while the 10-year swap was at 0.7225 per cent from 0.7400 per cent on Friday.