Retail sales help lift kiwi higher against aussie

IMre Speizer said the kiwi could test the record A96.52c it reached last month, though may struggle to break higher. Photo / File

The New Zealand dollar rose against its Australian counterpart yesterday as retail sales beat expectations, reinforcing the view that the economic tide is swelling in New Zealand's favour compared to that of its nearest neighbour.

The kiwi climbed as high as A96.48c, and was trading at A96.34c at 5pm in Wellington from A95.92c on Friday in New York. It gained to US75.07c at 5pm from US74.50c at 8am and US74.52c last week.

New Zealand government figures showed retail sales rose 1.7 per cent in the final three months of the year, beating estimates for a 1.3 per cent gain.

The data reinforce growing momentum in local consumer spending as the labour market picks up and low credit costs spur demand.

Upbeat consumer sentiment is one of several reasons Reserve Bank governor Graeme Wheeler has decided to keep the official cash rate at 3.5 per cent, while a slowing economy across the Tasman has seen Australia's central bank cut rates this month to a record-low 2.25 per cent.

"The news out of Australia is not good, while out of New Zealand it's okay to good," said Imre Speizer, market strategist at Westpac Banking in Auckland. The kiwi/Australian dollar cross-rate "has got some pretty strong momentum at the moment".

Speizer said the kiwi could test the record A96.52c it reached last month, though may struggle to break higher.

The next major event for the kiwi dollar is the GlobalDairyTrade auction on Tuesday in the United States, which investors are monitoring after a strong gain in whole milk powder prices at the last auction a fortnight ago, followed by the Wednesday release in Washington of minutes to the Federal Open Market Committee's last policy meeting, Speizer said.

The kiwi advanced to 88.90 at 5pm in Wellington from 88.47 on Friday in New York after data showed Japan's gross domestic product grew at an annualised 2.2 per cent pace in the three months ended December 31, missing the 3.6 per cent expected by economists.

The local currency increased to 65.73c from 65.44c last week, and rose to 48.65p from 48.38p. It gained to 4.6901 Chinese yuan from 4.6500 yuan last week. The trade-weighted index climbed to 77.74 from 77.16 on Friday in New York.

The two-year swap rate rose to 3.5525 at 5pm in Wellington from 3.54 on Friday, and the 10-year swap rate increased to 3.735 from 3.73.