NZ Dollar Declines As New Zealand’s July Manufacturing Activity Contracts
The New Zealand dollar edged lower against its major rivals on Thursday morning in Asia following a report by Business New Zealand showed that the manufacturing activity contracted in July for the first time in almost a year. A slide in Asian stocks also drove investors’ away from the higher-yielding currencies.
BNZ’s Performance of Manufacturing index registered 49.9 for July, compared to a downwardly revised reading of 55.9 for June. Readings below 50.0 indicate a contraction of activity in the surveyed sector.
In other news, food prices in New Zealand increased 1.6 percent in July compared to June, but were 1.0 percent lower than they were one year ago, Statistics NZ reported today.
The monthly increase follows a 1.3 percent on-month increase in June and a 0.7 percent Decrease in May.
On a year-on-year basis, the food prices dropped 1.0 percent, which marked the third consecutive annual decline.
Asian stock markets are trading notably lower today amid mounting worries about the global economy following a sharp setback suffered by stocks on Wall Street overnight.
As of 11:20 pm ET, New Zealand’s NZSE-50 fell 1 percent, Japan’s benchmark Nikkei 225 stock index dropped 2.02 percent, South Korea’s Kospi declined 1.04 percent, Australia’s All Ordinaries Index was down 1.45 percent and Taiwan’s weighted average fell 0.92 percent.
Around 10:00 pm ET, the New Zealand dollar fell below the 0.71 level against the US dollar for the first time since July 20 and the pair moved sideways thereafter. The kiwi-greenback pair that finished yesterday’s deals at 0.7149 is presently quoted at 0.7118. The next downside target for the pair is seen around the 0.7060 level.
The Commerce Department data on Wednesday showed that the U.S. trade deficit for June unexpectedly widened to reach its highest level in well over a year. The report showed that the trade deficit widened to $49.9 billion in June from a revised $42.0 billion in May.
The wider deficit came as a surprise to economists, who had expected the deficit to narrow modestly to $42.2 billion from the $42.3 billion originally reported for the previous month.
Against the yen, the New Zealand dollar slumped to a new multi-week low of 60.40 around 9:45 pm ET and the next likely support level for the pair seen at 59.90. The kiwi-yen pair that closed yesterday’s deals at 61.01 is presently quoted at 60.51.
The New Zealand dollar that finished Wednesday’s North American deals at 1.8013 against the euro reached as low as 1.8137 before moving on hold around 10:50 pm ET. The euro-kiwi pair is presently quoted at 1.8114.
The New Zealand dollar saw choppy versus its Australian counterpart in early Asian trading on Thursday, trading in a range between 1.2615 and 1.2550. The aussie-kiwi pair, which closed yesterday’s deals at 1.2563 is presently quoted at 1.2582.
The Australian Bureau of Statistics report showed that the nation’s unemployment rate unexpectedly increased by 0.2 percent in July to 5.3 percent. The figure was higher than the unchanged rate of 5.1 forecast by most economists.
Looking ahead, Japan is set to release its industrial production report for June and consumer confidence data for July shortly.
Euro-zone industrial production and Italian trade balance-both for June and the Italian CPI data for July and the European Central Bank’s monthly report for August are expected in the upcoming European session.
Across the Atlantic, the U.S. weekly jobless claims for the weekended August 7 and import price for July are expected to garner market attention in the North American session.
