NZ dollar rises to 6-week high vs Aussie as Australia seen hit harder by any China slowdown

The kiwi dollar gained to 93.40 Australian cents as at 8:30am in Wellington. Photo: John Sefton

The New Zealand dollar rose to the highest level in more than six weeks against its Australian counterpart on expectations the Australian economy will be harder hit by any slowing in China's growth.

The kiwi dollar gained to 93.40 Australian cents as at 8:30am in Wellington from 93.18 cents late yesterday. The kiwi traded at 69.30 US cents from 69.38 cents yesterday and the trade-weighted index was at 73.42 from 73.47.

Economists surveyed by Bloomberg this month expect the Chinese economy will expand 6.5 percent this year, slowing from a 6.9 percent pace in 2017. Figures this month showed fixed-asset investment in China in the first five months of the year rose 6.1 percent year-on-year, a record low, while growth in retail sales and industrial production slowed in May. Signs of a cooling Chinese economy come amid escalating trade tensions with the US, China's biggest export market.

"Growing concerns about Chinese growth have likely weighed on the AUD," said Nick Smyth, an interest rate strategist at Bank of New Zealand, in a note. "The NZD/AUD has pushed modestly higher again amid the AUD’s China-related underperformance."

Locally, traders will be watching for the Westpac consumer confidence survey for the second quarter and across the Tasman, the Reserve Bank of Australia is due to release the minutes of its last policy meeting. The latest Global Dairy Trade auction tonight will also be keenly watched and quarterly figures this week include balance of payments figures tomorrow and gross domestic product on Thursday, which is expected to show the economy grew 0.5 percent, slower than the Reserve Bank has forecast.

The local dollar fell to 59.65 euro cents from 59.83 cents late yesterday and traded at 52.31 British pence from 52.26 pence. It traded at 76.62 yen from 76.59 yen and fell to 4.4615 yuan from 4.4647 yuan.