NZ dollar gains vs Aussie after drop in Australian retail sales

The New Zealand dollar rose against its Australian counterpart after figures showed Australian retail sales unexpectedly fell in February, raising concerns about whether households across the Tasman are robust enough to drive economic growth.

The kiwi dollar traded at 92.02 Australian cents as at 5pm in Wellington from 91.57 cents at the start of the day and from 91.78 cents on Friday in New York. The kiwi traded at 70.03 US cents from 70.08 cents in New York last week.

Australian figures showed retail sales fell 0.1 percent in February, against analyst expectations for a 0.3 percent gain. That weighed on the Australian dollar even as other data showed approvals to build new homes jumped 8.3 percent in February, exceeding forecasts. With little in the way of New Zealand economic releases scheduled this week, the GlobalDairyTrade auction is likely to be the major local focus, especially given the price of whole milk powder gained at the last auction when dairy futures were pointing to a decline.

"We've seen a bit of buying versus the Aussie dollar as Australian retail sales underwhelmed," said Graham Parlane, private client manager at OMF. "In the big picture, the Australian dollar has gone from pricing in cuts (in interest rates) to things being far more stable."

Parlane said with less volume being offered for this week's dairy auction there's scope for prices to rise again.

Looking through this week, the US is scheduled to release a raft of figures, starting with manufacturing surveys tonight, trade and factory orders on Tuesday. The March ADP payrolls and non-farm payrolls round out the week.

The New Zealand dollar fell to 65.56 euro cents from 65.71 cents at the end of last week. The euro advanced last week after reports that the European Central Bank may be ready to wind back its policy of easy monetary conditions but Parlane said the ECB then signalled that the market had misinterpreted its position and policy was set to remain accommodative for a long time.

The trade-weighted index was at 76.04 from 76.06 on Friday in New York.

The kiwi traded at 55.84 British pence from 55.89 pence, slipped to 77.97 yen from 78.03 yen and fell to 4.8210 yuan from 4.8244 yuan.

The two-year swap rate fell 2 basis points to 2.29 percent and 10-year swaps fell 5 basis points to 3.39 percent.

(BusinessDesk)