Kiwi strengthens further against US dollar

Tuesday 21st December 2010

The New Zealand dollar continued strengthening against the US dollar today on the back of global commodity price gains, but was little changed near decade lows against the Australian dollar.

The kiwi dipped to its session low against the US dollar after the release of data this morning showing that there had been little in the way of migration gains in November. However, it quickly recovered and made up fresh ground during the day.

The NZ dollar was at US74.57c late this afternoon, up from US74.30c at 8am, having piled on nearly US1c in the last 24 hours.

The currency was a tad higher against the Australian dollar at A74.83c by 5pm, having pulled away from a decade low near A74.20c yesterday afternoon.

The NZ dollar was the strongest performing currency yesterday and overnight, although currency movements in general had been unremarkable overnight, BNZ currency strategist Mike Jones said.

Demand for commodity-linked currencies such as the NZ and Australian dollars was bolstered by modest gains in global commodity prices.

The kiwi was unchanged against the euro from this morning, at 0.5661, but held onto gains above yesterday's 0.5516 euro.

It was also higher against the yen, at 62.38 at 5pm from 61.89 yesterday, and sterling, at 47.94p from 47.57p.

The trade weighted index was at 67.39 from 66.95 late yesterday afternoon.

Domestic highlights this week include third quarter current account data tomorrow morning and third quarter gross domestic product on Thursday, before the market closes early on Friday for the Christmas holidays.

The euro recovered a little from a two-and-a-half week low but it was unlikely to get much traction amid fears that some debt-laden European countries and banks could still struggle.

Moody's Investors service said it may cut the ratings on some Spanish banks following its multi-notch downgrade of Ireland's credit rating last week. Speculation has risen that France and Belgium may also face possible cuts.

NZPA

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