New Zealand Dollar Buoyed by Weaker USD, Strong NZ Retail Sales

 
   By Rebecca Howard 
 

        WELLINGTON, New Zealand--The New Zealand dollar was sharply higher after getting an overnight lift from a weaker U.S. dollar and after strong domestic retail sales numbers.
        The New Zealand dollar was at US$0.7532 in late Wellington trading, versus US$0.7389 late Thursday and at A$0.9272 versus A$0.9261.
        The Kiwi "was already going up on the back of a weaker US dollar" after a disappointing U.S. retail sales report, said Westpac senior strategist Imre Speizer.
        It got another good boost from New Zealand's first-quarter retail sales data, he said. Retail spending beat expectations to rise strongly in the first quarter, driven by a sharp increase in sales of electrical and electronic goods retailing.
        The volume of real retail sales in the first quarter rose 2.7% from the prior quarter. When the effect of price changes is included, adjusted retail sales rose 1.7% in the first quarter, according to Statistics New Zealand on Thursday. The median forecasts in a Wall Street Journal poll of 10 economists was for rises of 1.6% and 1.0%, respectively.
        Domestic demand in the New Zealand economy remains very strong, and although market expectations for an RBNZ rate cut have risen over recent weeks, "we believe that the strong demand outlook will see the central bank keep the cash rate on hold," said Paul Bloxham, HSBC chief economist for Australia and New Zealand. However, HSBC acknowledges that the surprisingly low inflation numbers have increased the risks of a cut.
        The Kiwi largely moved sideways over the rest of the session, but was "looking strong," said Mr. Speizer. He said a raft of second-tier U.S. data overnight may disappoint, further weighing on the greenback.
        Write to Rebecca Howard at rebecca.howard@wsj.com
        (END) Dow Jones Newswires

        May 14, 2015 01:21 ET (05:21 GMT)

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