Kiwi consolidates around US80c

Monday 2nd May 2011

The New Zealand dollar briefly topped US81c to reach a new three-year high, and also nudged up from recent lows against the Australian dollar and the euro.

The rise of the kiwi against the greenback overnight Friday was against the backdrop of a US dollar that hit a three-year low against a basket of major currencies, as the Federal Reserve keeps short term interest rates near zero.

At 8am today the kiwi was buying US80.94c, up from US80.08c at 5pm on Friday and having peaked above US81c for a few minutes early on Saturday.

The NZ dollar was also up to A73.75c at 8am against the aussie from A73.46c on Friday evening, pulling further away from the month low around A73.25c touched early on Friday. Against the European currency the kiwi was up to 0.5464 euro, from 0.54, as it recovered from a 2-1/2-week low around 0.5390 early on Friday.

ANZ said the NZ dollar's recent strong performance was technically in need of a correction, but with plenty of buyers waiting in the wings it may again confound currency market participants.

Resistance above US81.10c appeared tough to break for now and the kiwi may need help from the Australian dollar to take it higher, ANZ said.

The NZ dollar's mild recovery against the aussie should not run too far, with the prospect of the Reserve Bank of Australia's interest rate review tomorrow. The kiwi's recovery against the euro did not look entirely convincing at this point.

BNZ currency strategist Mike Jones said the NZ dollar danced to the beat of global factors last week. While climbing against the US dollar it had slipped around 0.5 percent on a trade-weighted basis, indicating the extent to which US dollar weakness had been behind much of the recent strength in the kiwi against the greenback.

The trade weighted index rose to 68.74 at 8am today from 68.15 at 5pm on Friday, while the kiwi gained to 65.72 yen from 65.31.

NZPA

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