Forex - NZD/USD gains on upbeat economic talk

Published 01/27/2012, 03:34 PM
Updated 01/27/2012, 03:36 PM
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Investing.com - The U.S. dollar slid against its New Zealand counterpart on Friday on New Zealand Reserve Bank comments that its economy could absorb shocks from abroad, which fueled demand for the kiwi amid a session that saw the greenback slide worldwide.

NZD/USD hit 0.8240 in U.S. trading on Friday, up 0.30% and firming from a session low of 0.8189 and off from a high of 0.8250.

The pair sought to test support at 0.8042, Wednesday's low, and resistance at 0.8250, the earlier Friday high.

In the U.S., the Commerce Department reported Friday that the economy grew by 2.8% on year in the fourth quarter of 2011, a little lower than expected.

Markets really grew uneasy after digesting the data to learn a good chunk of that growth came from businesses replenishing inventories and not on purchases of capital goods, which would have indicated that growth was gaining more steam.

The news helped weaken the dollar, which was already slumping on news that the Federal Reserve plans to keep interest rates low through the end of 2014.

Furthermore in New Zealand, Reserve Bank Governor Alan Bollard said the economy could withstand shocks from abroad, which fueled demand both internally and externally for the country's dollar.

"We are seeing ongoing offshore demand for kiwi dollars,” said Tim Kelleher, head of institutional foreign-exchange sales in Auckland at ASB Institutional, according to Bloomberg.

New Zealand’s economy is "going OK, and certainly some of the individual sectors of the country are doing quite well."

The New Zealand dollar, meanwhile, was up against the Australian dollar but down against the yen, with AUD/NZD dipping 0.03% to 1.2934  and NZD/JPY down 0.64% at 63.23.

Over the weekend, markets will look for signs of  a restructuring deal between Greece and its private creditors, while the Australian Reserve Bank will release private sector credit data.

In New Zealand on Monday, building permits data will publish, shedding light on the country's housing market, while Australian new home sales and business confidence figures will publish as well.

Also on Monday, markets will keep an eye on the U.S. Bureau of Economic Analysis figures on personal spending and income as well as data on consumption figures.

In Japan, unemployment and industrial output figures will be released on Monday.





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