Dollar Gains versus South Pacific Currencies - 22.3.2012

US Dollar The dollar was mixed in Asian trading hours today. The greenback strengthened against the Australian and New Zealand counterparts, but fell slightly against the Japanese yen and the euro. The dollar index remains close to a two-week low of 79.31, staying at 79.50 in early Asian trading after yesterday’s modest gains. Yesterday the data from the United States showed the number of existing home sales unexpectedly dropped in February by 0.9%. Today HSBC Holdings and Markit Economics reported that China’s flash purchasing managers’ index fell in March to 48.1, the lowest level in 4 months, from 49.7 in February, signaling the nation’s manufacturing sector may contract for a fifth-straight month. The report, based on 85%-90% of total PMI survey responses, increased pressure on Asian risk-sensitive currencies on Wednesday. Japanese Yen Japanese yen strengthened slightly versus the greenback and the euro as Japan reported an unexpected February’s trade surplus. The Ministry of Finance said the volume of exports exceeded the volume of imports by 32.9 billion yen. At the same time exports fell by 2.7% from a year earlier, while imports increased by 9.2%. The data supported the national currency, however the gains were limited by the end of the Asian trading session. The dollar fell to 83.13 versus the yen but rose back in the aftermath toward 83.50, while the euro rebounded to 110.30 after touching 109.88. Australian, New Zealand Dollar The two currencies of South Pacific nations fell under pressure versus the US counterpart and extended losses of the previous two days. The kiwi almost touched a two-month low of 0.8059 after the national statistics department reported that New Zealand’s economic growth slowed to 0.3% in the last three months of 2011, compared with a revised 0.7% gain in the third quarter. The annual growth pace was at 1.8%, compared with a predicted 2.2% increase. The Aussie weakened considerably versus the US dollar touching the lowest level since January 19 – 1.0376, as the PMI report on China, the major Australia’s trading partner, suggested there may be needed some adjustments to the forecast of future economic performance of both nations.