The New Zealand currency advanced to a 10-week high against the Australian dollar and a 2-day high against the euro and the yen on Thursday morning in Asia as initial gains in the local stock market supported the currency.
New Zealand stock market opened marginally higher today on a positive overnight lead from the Wall Street, where U.S. stocks closed higher on a couple of better-than-expected economic reports. The benchmark NZX 50 index was up 3.89 points or 0.15% to 2,634.21 shortly after the market opened for the day, while the broader NZX All Capital Index added 2.45 points or 0.09% to 2,662.30.
Traders paid little reaction to a negative economic report from Statistics NZ showing that New Zealand's annual current account deficit widened in the fourth quarter on higher imports and a shortfall in investment income.
New Zealand posted a trade deficit of NZ$16.1 billion in the December quarter, equating 8.9 percent of gross domestic product, from NZ$15.5 billion in the previous quarter, which represented 8.6 percent of GDP. The deficit for the full year to December 2007 was NZ$14.4 billion or 8.2 percent of GDP.
On a seasonally adjusted basis, the deficit for the December quarter narrowed to NZ$3.77 billion from NZ$4.01 billion in the third quarter.
Earlier this month, the Reserve Bank of NZ forecast the current account deficit to remain around 8 percent of GDP through 2009 before narrowing steadily from early 2010.
The New Zealand dollar advanced to 0.5714 against the US dollar by 10:30 pm Eastern Time, compared to Wednesday's New York session close of 0.5665. On the upside, the New Zealand kiwi is likely to target the 0.572 level. The kiwi-buck pair is presently worth 0.571.
The kiwi dropped against the buck yesterday in the New York session after durable goods orders in the U.S. unexpectedly showed a substantial increase in February after falling in each of the six previous months. The U.S. Commerce Department report showed that durable goods orders jumped 3.4 percent in February after falling by a revised 7.3 percent in January. Economists had been expecting durable goods orders to fall by 2.5 percent compared to the 4.5 percent decrease that had been reported for the previous month.
A separate report by the Commerce Department showed an unexpected increase in new home sales in February. New home sales rose 4.7 percent to an annual rate of 337,000 in February from an upwardly revised January rate of 322,000. The results surprised economists, who had been expecting sales to fall to 300,000 from the 309,000 originally reported for the previous month.
Against the Japanese currency, the New Zealand dollar climbed to a 2-day high of 55.91 by 11:05 pm ET. This may be compared to Wednesday's North American session closing value of 55.28. As of now, the kiwi-yen pair is quoted at 55.88.
The yen lost ground as the corporate service prices in Japan were down 2.6 percent on year in February, the Bank of Japan said today, posting an index score of 92.1. On a monthly basis, corporate service process inched higher by 0.2 percent. The domestic corporate goods price index was down 1.1 percent on year, the data showed, showing an index score of 105.0. On month, CGPI was off 0.4 percent.
The New Zealand dollar touched 2.3777 against the common currency of Europe by 10:30 pm Eastern Time. This set a 2-day high for the New Zealand currency against the euro. The euro-kiwi pair that closed Wednesday's North American trading at 2.4003 is currently trading at 2.3805.
Investors are now likely to focus on the European session, in which the German GfK Consumer confidence survey results for April, French consumer confidence indicator for March, Italian business confidence for March and trade balance report for February as well as the euro-zone's seasonally adjusted M3 money supply for February are slated for release.
The New Zealand dollar rose to a 10-week high of 1.2232 against the Australian dollar by 11:10 pm ET, compared to Wednesday's North American closing value of 1.2335. Currently, the aussie-kiwi pair is trading at 1.226 with 1.218 seen as the next target level.
In economic news from Australia, the Conference Board's Leading Economic Index registered a decline of 0.6 percent in January. The Board's Coincident Index increased 0.6 percent for the period. The Leading index now stands at 111.2, with the base of 100 established in 2004. The Coincident Index stands at 13.1.
Meanwhile, Australia's Central Bank said today that the nation's banking system remains one of the world's strongest, well-financed and in a good position to weather the global economic crisis. In its semi-annual Financial Stability Review issued today in Sydney, the Reserve Bank of Australia notes that that while the global financial system continues to experience significant stress, the Australian Banking system has performed well over recent times. The RBA said banks continue to report solid profits, albeit lower than in recent years, are soundly capitalized and the larger banks have high credit ratings.
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