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NZ dollar static ahead of trade data

NZ NewswireNZ Newswire 26/10/2016 Jonathan Underhill

The New Zealand dollar was little changed against the greenback ahead of data expected to show the trade balance remained in deficit in September, and it recovered ground against the Aussie after a selloff on Wednesday triggered by stronger Australian inflation figures.

The kiwi traded at 71.49 US cents as at 8am in Wellington, from 71.56 cents late on Wednesday. It rose to 93.55 Australian cents, having dropped as low as 92.88 cents after inflation data across the Tasman.

New Zealand's merchandise trade deficit may have narrowed slightly to $1.1 billion in September from $1.27 billion the previous month, although the timing of large one-time purchases such as aircraft could skew the monthly numbers. The trade figures are likely to be the only highlight on a relatively quiet domestic calendar.

While Australia's headline consumer price index rose 0.7 per cent last quarter, beating market expectations of a 0.5 per cent rate, this was driven by a spike in fruit and vegetable prices after unfavourable weather.

"This morning the release of September's trade balance result is likely to be the highlight although in recent times this has had little impact on the currency," traders at HiFX said

HiFX the kiwi pared its decline against the Australian dollar after a closer look at inflation data showed a large contributor was fruit and vegetable prices which rose due to adverse weather conditions.

Traders are now awaiting US durable goods data for September which comes ahead of the initial estimate of third-quarter gross domestic product in the US due out on Friday. Overnight, the US Markit PMI for October rose to 54.8 from 52.5, pointing to some strength in US manufacturing.

The kiwi fell to 58.40 British pence from 58.80 pence, slipped to 65.52 euro cents from 65.70 cents, it was at 74.73 yen from 74.67 yen and fell to 4.8403 Chinese yuan from 4.8447 yuan. The trade-weighted index was little changed at 76.98 from 76.95.

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