NZ Dollar Rises Amid Risk Appetite On China Stimulus Hopes
January 14 2019 - 10:03PM
RTTF2
The New Zealand dollar advanced against its major counterparts
in the Asian session on Tuesday, as Asian shares rose after China
signaled policy measures to counter slowdown in the world's second
largest economy.
In a statement, Chinese finance ministry said that it will
implement larger tax and fee cuts to help reduce burdens for small
firms and manufacturers. It also pledged to ramp up the fiscal
expenditure this year by at least 5 percent.
China's economic planning agency, the National Development and
Reform Commission, vowed to safeguard a "good start" for the
Chinese economy in the first quarter and see that it will "operate
within an appropriate range" for 2019.
The NDRC is planning to strengthen economic growth by providing
more funding support for ongoing infrastructure projects and
incentives to encourage the purchase of vehicles and household
appliances.
Separately, Chinese central bank said that it will stick with
its prudent monetary policy by putting it neither too tight nor too
loose, and strengthen the counter-cyclical adjustments.
The bank said it will make monetary policy more forward-looking,
flexible and targeted.
The U.S. corporate earnings seasons kicked off on Monday, with
Citigroup posting fourth-quarter profit that beat analysts'
expectations.
Data from Statistics New Zealand showed that food prices in New
Zealand advanced a seasonally adjusted 0.5 percent on month in
December.
Unadjusted, food prices were down 0.2 percent last month.
The kiwi climbed to 1.6760 against the euro, its strongest since
December 19, 2018. The kiwi is likely to find resistance around the
1.66 region.
The NZ currency spiked up to near a 4-week high of 0.6849
against the greenback and near a 3-week high of 74.46 against the
yen, off its early lows of 0.6812 and 73.67, respectively. Next key
resistance for the kiwi is likely seen around 0.70 against the
greenback and 76.00 against the yen.
The kiwi appreciated to an 11-day high of 1.0537 against the
aussie and held steady thereafter. The pair ended yesterday's deals
at 1.0549.
The yen weakened against its major counterparts, as Beijing's
assurances to stabilize a slowing economy triggered a sell-off in
safe haven assets.
On the economic front, the Bank of Japan that the M2 money stock
in Japan was up 2.4 percent on year in December, coming in at
1,014.2 trillion yen. That was in line with expectations following
the 2.3 percent gain in November.
The M3 money stock climbed an annual 2.1 percent to 1,011.9
trillion yen - unchanged and in line with forecasts. The L money
stock was unchanged at 1.9 percent, standing at 1,790.6 trillion
yen.
The yen reversed from its early highs of 108.13 against the
greenback and 110.19 against the franc, falling to a 6-day low of
108.75 and a 5-day low of 110.84, respectively. If the yen falls
further, 110.00 and 112.00 are possibly seen as its next support
levels against the greenback and the franc, respectively.
The yen fell to more than a 2-week low of 140.43 against the
pound and near a 3-week low of 78.49 against the aussie, from its
early highs of 139.05 and 77.78, respectively. The yen is seen
finding support around 142.00 against the pound and 79.5 versus the
aussie.
Reversing from its early highs of 123.99 against the euro and
81.40 against the loonie, the yen weakened to 4-day lows of 124.86
and 82.00, respectively. The next possible support for the yen is
seen around 126.00 against the euro and 83.5 against the
loonie.
Looking ahead, Eurozone inflation for December and trade data
for November are due in the European session.
In the New York session, U.S. PPI for December and New York
Fed's empire manufacturing survey for January, as well as Canada
existing home sales for December are scheduled for release.
At 10:00 am ET, European Central Bank President Mario Draghi
will testify on the bank's 2017 Annual Report before the European
Parliament in Strasbourg.
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