New Zealand Dollar Sinks, China PMI Lifts Aussie

The New Zealand dollar skidded to a low of six weeks on July 24 after central bank of the country decided to follow a wait-and-see stance following its fourth straight rate hike. On the other hand, the Australian dollar rose after a survey showed the factory sector of China expanded at its fastest pace in 18 months.

New Zealand dollar

The kiwi dollar dropped nearly a full U.S. cent to touch levels not seen since June 12. The Australian dollar, which is often used as a proxy for the economic performance of China, touched a high of three weeks of $0.9480 and last traded at $0.9463.

In July, the HSBC/Markit Flash China Manufacturing Purchasing Managers’ Index rose to 52.0 that is its highest since January 2013.

“Long positions in the pound and antipodean currencies were unwound at the height of concerns towards tensions in the Ukraine, but such moves are winding down with the market now more immune to geopolitical risk,” said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

“Under such conditions participants are opting again for the pound, Aussie and dollar, which could benefit from the next round of economic indicators. This leaves the euro as the sole bear currency,” he said.

The Reserve Bank of New Zealand (RBNZ) raised its cash rate by 25 basis points to 3.5 percent early and remarked the economy appeared to be responding to higher rates as intended.

“Perhaps the main surprise was the language regarding the high NZD exchange rate. ‘There is potential for a significant fall’ opens to interpretation as a veiled intervention threat,” said Imre Speizer, senior strategist at Westpac in Auckland.

One Response to “New Zealand Dollar Sinks, China PMI Lifts Aussie”

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