By Yasuhiko Seki - Aug 13, 2010 12:16 PM GMT+0800
New Zealand’s dollar rose by the most in more than a week against the greenback and the yen after the government said second-quarter retail sales climbed at the fastest pace since 2007.
The so-called kiwi snapped four days of losses versus the yen as sales rose 1.3 percent during the three months ended June 30, adjusted for inflation, beating the median estimate for a 0.3 percent increase. The Aussie dollar pared a weekly decline against the yen as Asian shares snapped a four-day loss and the Bank of Japan said board members last month indicated they were worried about the Japanese currency’s advance.
“The strong retail sales data came as a relief and helped ease slightly concerns that a soft patch was developing in New Zealand’s economy,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest online currency trader.
New Zealand’s dollar advanced to 71.38 U.S. cents as of 3:40 p.m. in Wellington from 70.85 cents in New York yesterday, when it reached as low as 70.66, the least since July 20. The currency has lost 2.7 percent this week. It jumped to 61.47 yen from 60.90 yen.
Australia’s currency was at 90.14 U.S. cents from 89.63 cents yesterday, when it touched 89.14 cents, the weakest since July 29. It has fallen 1.8 percent since Aug. 6. The currency advanced to 77.60 yen from 76.99 yesterday.
Retail Sales
Sales advanced at 14 of 24 store categories surveyed in the second quarter, led by motor vehicles, appliances, accommodation and clothing, Statistics New Zealand said in Wellington today.
“Today’s retail data confirms that retail spending has been on an improving trajectory since June,” said Mark Smith, an economist at ANZ National Bank Ltd. in Wellington. “This is likely to make the September monetary policy meeting a finely balanced decision.”
Swaps traders see a 52 percent chance the Reserve Bank of New Zealand will raise interest rates next month, up from 50 percent yesterday, according to an index compiled by Credit Suisse Group AG.
Kan, Shirakawa
The so-called Aussie trimmed weekly losses as speculation intensified that Japan is moving closer to taking action to stem the appreciation of the yen.
The Asahi newspaper reported, without citing anyone, that Japanese Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa may meet next week to discuss measures to address the yen’s strengthening.
“With regard to the recent appreciation of the yen and fall in Japanese stock prices, some members said that the effects on Japan’s economic activity should be examined closely,” minutes of a July 14-15 meeting published today in Tokyo showed.
Central banks intervene in foreign-exchange markets when they buy or sell currencies to influence exchange rates.
“We probably need to watch more carefully for comments from the Japanese authorities or signs of actual action,” said Hiroshi Maeba, deputy general manager of foreign-exchange trading in Tokyo at Nomura Securities Co., Japan’s biggest securities broker. “A growing wave of verbal intervention makes it harder for investors to test the upside of the yen on cross trades.”
The South Pacific nation’s currency also rose after Asian shares reversed earlier losses.
The MSCI Asia Pacific Index of regional shares and futures for the Standard & Poor’s 500 Index each rose 0.4 percent.
“A stable equity-market performance will make it easier for retail investors to buy the Aussie,” said Morio Okayasu, chief analyst in Tokyo at FOREX.com Japan Co., a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey.
Weekly Decline
Australia’s currency was poised to snap a three-week rally against the greenback amid growing concerns for the global economy, sapping demand for currencies tied to growth.
U.S. consumer prices excluding fuel and energy, the so- called core rate, rose 0.1 percent in July, compared with 0.2 percent the prior month, according to a Bloomberg survey ahead of today’s report. Japan’s gross domestic product growth slowed to an annualized 2.3 percent rate in the three months to June 30, from 5 percent the previous quarter, according to a separate survey before the Aug. 16 report.
‘Shaky Outlook’
“Given the shaky outlook for the global economy, it is hard to see an immediate resurgence in expectations for rate increases in Australia,” said Hiroshi Yanagisawa, a Tokyo-based dealer at FX Prime Corp., a foreign-exchange unit of the Japanese trading house Itochu Corp. “The Aussie will struggle in making clear headway.”
Swaps traders sees no chance the Reserve Bank of Australia will raise interest rates next month, according to an index compiled by Credit Suisse Group AG.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell one basis point to 3.85 percent.
Australian bonds rose, capping an advance that dropped the yield on the benchmark 10-year note by 13 basis points since Aug. 6, the biggest weekly decline in more than a month, according to data compiled by Bloomberg. The rate stood at 5.02 percent, after touching 4.98 percent yesterday, the lowest level since May 2009.
To contact the reporter on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net
From Bloomberg published on Aug 13, 2010 12:16 PM GMT+0800