Investing.com – The New Zealand dollar eased in early trade on Wedensday after consumer prices rose less than expected in the second quarter with markets focused on China GDP data.
China is due to report a slew of second quarter numbers, including GDP, industrial output, retail sales, fixed-asset investment, all at 1000 local time (0200 GMT). The big one is GDP growth with expectations of gain of 7.4% year-on-year for April-June, matching the first quarter rate.
Earlier, New Zealand reported second quarter CPI data that showed a gain of 0.3% month-on-month at 1045 local time (2245 GMT), with expectations for an increase of 0.4%.
NZD/USD traded at 0.8727, down 0.46%, after the data.
Australia releases the Westpac-MI Leading Index for June at 1030 Sydney time (0030 GMT). The Westpac-MI index in the last four months has been showing growth below trend, and the same in expected in the latest update.
AUD/USD traded at 0.9370, flat, ahead of the domestic data and the China figures – a major driver for Australian markets as the country is a top export destination for many commodities such as iron ore.
Overnight, the dollar firmed against most major currencies after Federal Reserve Chair Janet Yellen told U.S. lawmakers that the economy is improving despite slack in the labor market, though momentum stocks may have grown a little frothy.
Yellen told the Senate Banking Committee earlier that rates are likely to remain on hold for a considerable period after the bank’s quantitative easing program ends, though her observation that small-cap, biotech and other momentum stock valuations appear “stretched” gave the dollar support, leaving investors to conclude that interest rates could rise sooner than later if the labor market improves.
Yellen’s comments overshadowed mixed U.S. data, which depicted an economy that continues to recover albeit on a road with lingering potholes.
The Commerce Department reported that U.S. retail sales rose just 0.2% in June, below forecasts for a 0.6% increase. Retail sales for May, however, were revised up to 0.5% from a previously reported 0.3%.
A separate report showed that manufacturing activity in New York state rose to a four-year high this month. The Empire state manufacturing index rose to 25.6 in July from 19.3 in June. Analysts had expected the index to decline to 17.0.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 80.45.
On Wednesday, the U.S. is to release reports on producer price inflation and industrial production. Meanwhile, Fed Chair Janet Yellen Carney is to testify on monetary policy before the House Financial Services Committee.