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Kiwi hits new three-year high against US dollar

Tuesday 3rd May 2011

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The New Zealand dollar peaked at a new three-year high against a broadly weaker greenback, but quickly fell away again.

The kiwi pushed up to US81.19c early today, according to Reuters data, but fell away in the following hours to US80.66c at 8am, similar to its level at 5pm yesterday.

During the overnight session the US dollar declined to a three-year trough against major currencies, and is expected to remain under pressure as investors seek higher rates offered abroad and shun the lower yielding greenback.

The euro climbed to a 17-month high above US$1.49 after surprisingly strong European manufacturing data bolstered chances that interest rates in the euro zone will rise further.

Data also showed US manufacturing expanded at a brisker pace than expected in April while another report showed construction spending rose at its fastest pace in 11 months in March.

"The reaction should reaffirm how difficult it is for the US dollar to get a sustained lift from strong growth and price numbers until such data starts to significantly pull forward US rate expectations," said Alan Ruskin, global head of G10 currency strategy at Deutsche Bank in New York.

The NZ dollar edged down to 0.5438 euro at 8am from 0.5447 at 5pm, and was marginally higher at A73.71c against the Australian dollar.

BNZ strategist Kymberly Martin said buoyant global commodity prices, stable risk appetite, and a broadly weaker US dollar appeared to be sufficient to keep the NZ dollar drifting higher against the greenback. That was despite the Reserve Bank's recent statement that NZ dollar strength was unwelcome.

The kiwi edged lower to 65.52 yen at 8am, while the trade weighted index was down to 68.54 from 68.61 at 5pm.

 

NZPA



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