Kiwi at 4.5-year high against AUD after weaker retail sales across Tasman

The New Zealand dollar touched a new 4.5-year high against the Australian dollar and may press higher after weaker than expected retail sales across the Tasman sapped traders' already waning appetite to invest there.

The kiwi rose as high as 85.15 Australian cents, trading at 84.96 cents at 5pm in Wellington from 84.82 cents yesterday. It was at 77.41 US cents from 77.42 cents at 8am, down from 77.73 cents yesterday.

The Australian dollar fell to a three-year low 90.93 US cents and traded at 91.08 cents at 5pm in Wellington after government figures showed retail sales grew 0.1 percent in May, short of the 0.3 percent expected.

That added to souring global sentiment over the Australian economy, which is drawing near to the peak of its resources boom, something cited by Reserve Bank of Australia governor Glenn Stevens in a speech today. The RBA yesterday kept its key rate at a record-low 2.75 percent, while saying there is still scope for more easing and that the currency was still too high.

"The market ran more with the weak retail sales story, and the Aussie/US (cross rate) is breaking down," says Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "The kiwi's got good momentum (against the Australian dollar) - there's quite a good chance we'll see 86 cents in the next week."

Prices of dairy products rose 0.7 percent at Fonterra's latest GlobalDairyTrade auction and the volume sold jumped to a six-month high, while Auckland house sale prices continued to creep up in June, according realtor Barfoot & Thompson figures.

Investors are waiting on US jobs data on Friday in Washington, which are expected to show a slightly slower employment growth from May, and will be looking at private payrolls figures out overnight in the US.

The Federal Reserve wants to bring down the unemployment rate before it starts unwinding its money printing programme.

The kiwi gained to 77.89 yen at 5pm in Wellington from 77.51 yen yesterday and advanced to 59.68 euro cents from 59.56 cents. It was little changed at 51.07 British pence from 51.17 pence yesterday.

The trade-weighted index was 73.85 from 73.79 yesterday.

(BusinessDesk)