NZ dollar surges more than 1 US cent as Draghi backs euro

Friday 27th July 2012

The New Zealand dollar rose more than 1 US cents, climbing back above 80 US cents, after European Central Bank President Mario Draghi said policy makers will do whatever it takes to support the euro, helping stoke risk appetite worldwide.

The kiwi dollar rose to 80.17 US cents, from 79.11 cents at 5pm in Wellington yesterday. The trade-weighted index rose to 72.35 from 71.84.

Draghi told the Global Investment Conference in London yesterday that the ECB is "ready to do whatever it takes to preserve the euro" within its mandate and that he was confident "it will be enough." Stocks rallied strongly across Europe and the US and so-called growth currencies such as the kiwi, Australian and Canadian dollars advanced at the expanse of so-called safe-havens such as the greenback and the yen.

The New Zealand dollar "took flight as risk appetite surged after supportive comments from ECB President Draghi," said Kymberly Martin, currency strategist at Bank of New Zealand. "We see near-term resistance at 0.8080, and support at 0.8000."

Martin said with little local economic data due out in New Zealand or across Asia today "all eyes will be on the US release of Q2 GDP" on Friday. The data is expected to show annualised growth of 1.4 percent in the second quarter, slowing from 1.9 percent three months earlier.

The kiwi dollar strengthened to 77.11 Australian cents from 76.65 cents yesterday and jumped to 62.71 yen from 61.82 yen.

The local currency was little changed at 51.09 British pence and rose to 65.27 euro cents from 65.17 cents.

BusinessDesk.co.nz

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