Bloomberg News

N.Z. Dollar Touches 5-Month High Versus Yen After Retail Sales

February 15, 2012

Feb. 15 (Bloomberg) -- The New Zealand dollar touched a five-month high against the yen after the nation’s retail sales rose more than economists estimated in the fourth quarter.

Demand for the so-called kiwi was also supported as Asian stocks rebounded before U.S. data this week projected to show growth in industrial production and producer prices. Australia’s dollar halted losses from yesterday after a private survey showed the country’s consumer confidence rose by the most in three months as two interest-rate reductions late last year improved the financial outlook for households.

“Retail numbers are undoubtedly kiwi supportive,” said Mike Jones, a foreign-exchange strategist at Bank of New Zealand in Wellington. “There are signs of life in New Zealand domestic demand and we’ll see markets beginning to bring forward the timing of Reserve Bank of New Zealand interest-rate hikes.”

New Zealand’s dollar was at 65.34 yen at 11:47 a.m. in Sydney from 65.40 in New York yesterday, after touching 65.55, the most since Sept. 2. The kiwi was unchanged at 83.37 U.S. cents. Australia’s dollar traded at $1.0686 from $1.0691. The so-called Aussie was little changed at 83.83 yen.

The MSCI Asia Pacific Index of stocks added 0.5 percent.

U.S. industrial production probably rose 0.7 percent in January, according to a Bloomberg News poll of economists taken before the Federal Reserve releases the data today. A Labor Department report tomorrow may show the producer-price index gained 0.4 percent in January from the previous month, when it fell 0.1 percent, according to a separate Bloomberg survey.

Reserve Bank Policy

New Zealand’s retail sales adjusted for inflation rose 2.2 percent in the three months through December from the third quarter, when they gained a revised 2.4 percent, Statistics New Zealand said in Wellington today. Sales were forecast to climb 1.2 percent, according to the median estimate of economists surveyed by Bloomberg.

Traders are betting New Zealand’s central bank will raise rates by 10 basis points, or 0.10 percentage point, over the next 12 months, according to a Credit Suisse Group AG index based on swaps. On Feb. 6, bets went from a cut to an increase.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose four basis points to 2.91 percent.

RBNZ Governor Alan Bollard has kept the official cash rate at a record-low 2.5 percent since March to revive confidence after earthquakes in Christchurch and as risks of weaker global demand increased.

In Australia, the sentiment index for February advanced 4.2 percent to 101.1, the highest level since November, the Westpac Banking Corp. and Melbourne Institute survey taken Feb. 6-10 of 1,200 consumers showed today in Sydney.

Australia’s government bonds fell, pushing the yield on the 10-year security up one basis point to 4.01 percent.

Euro Crisis

Demand for the South Pacific nations’ currencies was limited after European Finance ministers canceled a Brussels meeting slated for today. The officials will hold a teleconference instead to prod Greece to deliver budget cuts in exchange for an aid package.

“Frustration over the delays in the Greek negotiations is certainly capping risk appetite at the moment,” said Bank of New Zealand’s Jones. “Until we see a clearer signs in Greece, we think the risk currencies are going to struggle to post through substantial gains.”

--Editors: Naoto Hosoda, Rocky Swift

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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