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NZ dollar off highs as Chinese data raises caution
Reuters - Monday, March 1
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* Kiwi off highs as Chinese data weighs
* Rate meetings in Australia, euro zone, UK to guide market
* NZ dollar seen moving with broader market events
WELLINGTON, March 1 - The New Zealand dollar retreated from early highs on Monday as it followed the Australian dollar lower on softer than expected Chinese economic data.
The kiwi <NZD=D4> traded around $0.6985/88 at 0430 GMT, stronger from $0.6832/42 late on Friday but off a session high after trading between $0.6973 and $0.7016.
The currency opened up on firmer commodity prices and stocks, but drifted lower after data showed that Chinese manufacturing eased last month, suggesting slower government spending and steps to curb credit growth could be taking some of the steam out of the world's third-largest economy. [ID:nTOE62001T]
"Overall, the NZ dollar continues to follow the Australian dollar's fortunes, with the Euro-U.S. dollar a lessening influence," said Derek Rankin of Rankin Treasury Advisory.
Offshore data and events are set to dictate the kiwi's movements through the week.
The first major event is the Reserve Bank of Australia's rate review on Tuesday, with the market split about whether the central bank will raise rates after unexpectedly holding steady last month.
Markets have priced a 60 percent chance <CSRBA=CSAU> of a 25-basis-point rate rise to 4.0 percent.
In addition to the RBA, there are central bank meetings in Canada, Britain and the euro zone this week. The Reserve Bank of NZ's will hold its next rate meeting next week.
Analysts expect the RBNZ to hold rates at record low of 2.5 percent until June, while markets pricing for the chance of a rate hike in June eased to 84 percent from fully priced due partly to fiscal worries in the euro zone. [NZ/POLL]
The kiwi was generally steady against other major currencies, holding near a two-month high against sterling <NZDGBP=R>, which was weaker across the board on growing political uncertainty after a poll showed the risk of a hung parliament. ID:nLDE61R07C]
The local data calendar is thin this week, with largely second-tier numbers, including new car sales, government accounts and wholesale trade. Dairy giant Fonterra also hold its latest Internet milk powder auction on Tuesday, which in the past has been an influence on the kiwi.
New Zealand government debt was firmer, with the yield on benchmark NZ 10-year bond <NZ10YT=RR>. U.S. Treasury note futures dipped in Asian trading on talk of an aid plan for Greece [ID:nLDE61Q085] but trimmed losses after the Chinese PMI data.
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