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NZ dollar heads for small weekly gain

NZ NewswireNZ Newswire 15/04/2016 Jonathan Underhill

A New Zealand one-hundred dollar banknote © Brent Lewin/Bloomberg A New Zealand one-hundred dollar banknote The New Zealand dollar rose and is heading for a 1.4 per cent weekly gain after figures showed the Chinese economy grew 6.7 per cent in the first quarter, meeting expectations and reassuring investors that global economic growth won't be derailed.

The kiwi increased to 68.88 US cents at 5pm in Wellington, from 68.42 cents on Thursday and up from 67.92 cents at the end of last week. The trade-weighted index rose to 72.72 from 72.36 and 71.89 a week ago.

Chinese economic growth slowed from 6.8 per cent in the fourth quarter of last year but fixed-asset investment rose 10.7 per cent, beating estimates. China is New Zealand's biggest trading partner and the world's second-largest economy and its health typically benefits growth-linked currencies such as the kiwi.

"What's really happened with the Chinese data is that it has confirmed what we've seen in the last month or so that the global situation has been steadily improving," said Sam Tuck, senior foreign exchange strategist at ANZ Bank New Zealand.

"That's lifted the kiwi over the last month or so as the US (Fed) has stayed dovish. But a better global economy should free up the Fed and allow the US dollar to strengthen."

Traders are now focused on the release next Monday of the consumers price index for the first quarter, which the Reserve Bank has forecast to show a 0.2 per cent quarterly for an annual increase of 0.4 per cent.

ANZ Bank is predicting the central bank will cut the official cash rate in June to a record low 2 per cent and lower the OCR again in November to just 1.75 per cent.

The kiwi was little changed at 89.31 Australian cents from 89.38 cents on Thursday. It rose to 48.69 British pence from 48.40 pence, and increased to 61.18 euro cents from 60.74 cents. It gained to 4.4681 yuan from 4.4353 yuan.

The two-year swap rate rose 3 basis points to 2.24 per cent and the 10-year swaps rose 1 basis point to 2.95 per cent.

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