The kiwi was trading at 66.42 US cents at 5pm. Photo / 123RF
The New Zealand dollar rose after slightly better than expected Chinese data boosted hopes that the United States-China phase one trade deal signed earlier this week will mean the trade war will cease battering that economy.
The kiwi was trading at 66.42 US cents at 5pm in Wellington from 66.30 at the same time yesterday and compared with 66.31 in New York last Friday. The trade-weighted index was at 72.66 points from 72.51.
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China's fourth quarter GDP rose 6 per cent from the same quarter a year earlier, as expected, but annual retail sales growth in December of 8 per cent beat expectations of 7.9 per cent while industrial production growth of 6.9 per cent compared with expectations of 5.9 per cent.
That suggested China's economy has stabilised and that near-term momentum is picking up. China is both New Zealand and Australia's largest trading partner while Australia is New Zealand's second-largest trading partner and the largest destination for New Zealand's manufactured exports.
"That stuck a bit of a rocket under the kiwi," said Mike Shirley, a dealer at Kiwibank.
Chinese officials have been painting the economic outlook as brighter with Vice Premier Liu He, who was in Washington on Wednesday to sign the phase one deal, telling journalists that he expects China's economy to perform well this year.
The market had been abuzz with US Vice-President Mike Pence's "almost throw-away comment" in an interview with Fox News just hours after the phase one deal was signed that work has already begun on phase two of a trade deal with China. "Exactly what that means, who knows?" Shirley said.
Pence certainly didn't elaborate but many viewed the phase one deal as kicking the thornier areas of disagreement between the two superpowers down the road.
In addition, while China has committed to buying US$200 billion ($301.1b) of American goods, some doubt its ability to fulfil that commitment.
US tariffs on US$370b of Chinese goods and Chinese tariffs on US$120b of US exports into China, both levied on the other nation during the trade war that began two years ago, remain in place.
Domestic data earlier today showed manufacturing activity contracted in December but recent improvements in business sentiment may mean the sector has bottomed.
The New Zealand dollar was trading at 96.34 Australian cents from 96.02 yesterday, at 50.80 British pence from 50.82, at 59.67 euro cents from 59.45, at 73.20 yen from 72.88 and at 4.5632 Chinese yuan from 4.5642.
The two-year swap rate rose to a bid price of 1.2049 per cent from 1.1949, while 10-year swaps nudged up to 1.6750 per cent from 1.6450.
The council has also been served with judicial review proceedings.