The New Zealand dollar fell against the Australian dollar after stronger-than-expected November retail sales across the Tasman added to the view that consumer spending is picking up and fuelling Aussie growth.
The kiwi declined to 91.37 Australian cents as at 5pm in Wellington from 91.64 Australian cents at 8am and 91.49 cents yesterday. It rose to 71.88 US cents from 71.64 cents yesterday, having climbed as high as 72.28 cents overnight.
The Australian dollar climbed after Australian Bureau of Statistics figures showed retail sales rose 1.2 per cent in November from October versus an expected 0.4 per cent. It was the steepest gain since 2013 and was driven by sales and the release of the iPhone X.
"The much stronger than expected surge in retail sales values in November, alongside the decent rise in October, suggests that real consumption growth bounced back in the fourth quarter," said Capital Economics in a note.
The kiwi was "leading the way, quite strong above 72 US cents and then the Aussie retail sales were stronger than expected and we have seen selling of kiwi and buying of Aussie since then. That also knocked it back to just under 72 US cents but it is still looking reasonably perky," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. The currency is "grinding away" but has strong resistance at 72.50 US cents, he said.
Looking ahead, markets will be interested in the US producer price index overnight and the US consumer price index on Friday but "most people are looking at the Chinese talk on Treasuries," Kelleher said.
The greenback came under pressure after Bloomberg reported senior government officials in Beijing reviewing the nation's foreign-exchange holdings recommended slowing or halting purchases of US Treasuries, citing people familiar with the matter. China holds the world's largest foreign-exchange reserves, at US$3.1 trillion, and regularly assesses its strategy for investing them.
The kiwi rose to 4.6838 Chinese yuan from 4.6713 yuan yesterday. It traded at 80.29 yen from 80.43 yen as the Japanese currency continued to move higher after the Bank of Japan trimmed its purchases of Japanese government bonds. The NZ dollar was at 60.14 euro cents from 59.97 cents yesterday and increased to 53.22 British pence from 52.92 pence yesterday.
The trade-weighted index advanced to 74.78 from 74.66 yesterday.
New Zealand's two-year swap rate lifted 1 basis point to 2.20 per cent while the 10-year swap was unchanged at 3.19 per cent.