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New Zealand Dollar Slips Despite Non-Resident Appetite

New Zealand Dollar Slips Despite Non-Resident Appetite

2017-01-18 03:10:00
David Cottle, Analyst
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Talking Points:

  • The New Zealand Dollar has returned some of its Trump-inspired strength
  • This process continued despite news of steady offshore appetite for NZ bonds
  • Non-residents held 63.2% of the market in December

The New Zealand Dollar continued to retrace some of its Donald Trump-inspired gains on Wednesday, despite news of steady foreign appetite for its home nation’s assets.

Non-resident holdings of New Zealand bonds amounted to 63.2% of the market in December, official data showed. That was only slightly below November’s 63.6% level. The country offers investors a developed market with the relatively rare combination of high credit ratings and a stable outlook. Moreover, even at a record low of 1.75% for the Official Cash Rate benchmark, its interest rates are also relatively tempting at a time when other developed economies have cut their own to the bone.

Compare them with – say – Japan’s 0.0% or the UK’s 0.25% and you get the picture.

However, these arguments passed NZD/USD by a little. The Kiwi benefitted as did most other currencies from Donald Trump’s assertion in a Wall Street Journal interview that the US Dollar was too high.

NZD/USD climbed as high as 0.72194 on the back of these comments, but had been giving back some of those gains as Auckland’s Wednesday morning wore on. The process seems to be continuing despite the foreign bond numbers which in more usual times might have lent New Zealand’s currency a bit of support.

NZD/USD was down at 0.71985 in the immediate aftermath.

Ignoring the data. NZD/USD gives back some of its gains

New Zealand Dollar Slips Despite Non-Resident Appetite

Chart compiled using TradingView

Need a steer on 2017’s first quarter? DailyFX analysts’ forecasts await you here.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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