Dollar holds gains as Chinese data beats estimates, narrow trading range seen

 The New Zealand dollar held its gains against the greenback after figures showed the Chinese economy grew faster than expected in the third quarter, although still the slowest pace since early 2009 and leaving open the door for Beijing to introduce stimulus measures.

The kiwi traded at 79.85 US cents at 5pm in Wellington, from 79.73 cents at the start of the day and up from 79.48 cents yesterday. The trade-weighted index edged up to 77.26 from 77.16 yesterday.

China's gross domestic product grew 7.3 percent in the third quarter, the slowest pace since the first quarter of 2009 but faster than the 7.2 percent rate expected by economists. China is New Zealand's biggest market and the GDP data suggests demand for the nation's exports won't diminish soon. Traders said the kiwi may trade in a narrow range this week, with figures on Thursday expected to show inflation is benign.

"The expectation was that the (Chinese) data might have been weaker than it was actually," said Mark Johnson, senior dealer at OMF. "The question from here is should we expect some more aggressive policy action such as rate cuts."

Johnson said the New Zealand dollar "still looks pretty well capped" at around 80 US cents and would find support at 79.10 cents. It would take weaker US economic figures to push the kiwi higher, he said. "I don't see it going anywhere in a heck of a hurry."

Government figures showed New Zealand’s annual net migration rose to a record last month, driven by inflows of students. The country gained a net 45,400 migrants in the year ended Sept. 30, the biggest ever gain, according to Statistics New Zealand.

The central bank has said migration could fuel inflation although the composition of the arrivals, including labourers looking for short-term work, suggests any effect would be subdued.

The New Zealand dollar was unchanged at 90.57 Australian cents from late yesterday. It traded at 62.33 euro cents from 62.28 cents and was little changed at 49.37 British pence from 49.34 pence. The kiwi fell to 85.09 yen from 85.33 yen yesterday.

(BusinessDesk)