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NZ dollar extends gain on optimism over Europe, ahead of retail sales

Monday 14th November 2011

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The New Zealand dollar rose after Italy appointed a leader of a new government to introduce austerity measures that may help contain Europe's debt crisis and limit the damage to global economic growth.

The kiwi dollar traded at 78.75 US cents, up from 78.53 cents in late US trading on Friday.

Stocks rallied in the US and Europe on optimism changes of leadership in Italy and Greece will help those countries adopt measures to cut costs and prevent default on their debt. Stocks also rose after US consumer confidence improved.

Italy yesterday appointed former European Commission Mario Monti to lead a government that will implement reforms after former Prime Minister Silvio Berlusconi was forced to step down.

"The kiwi managed to extend its gain on the back of Italy getting a new prime minister," said Khoon Goh head of market economics at ANZ New Zealand. The kiwi may trade in a range of 78.20 cents to 78.94 cents today, he said.

Traders will be watching local data today for evidence of the pace of the New Zealand economy, including retail sales for the third quarter and the Performance of Services Index (PSI) for October. Retail sales rose 0.7% in the three months ended Sept 30 and were up 4.8% from a year earlier, according to a Reuters survey.

The PSI comes after figures on Nov. 10 showed the manufacturing sector contracted last month with its worst reading since June 2009.

The kiwi dollar rose from 76.43 Australian cents from 76.38 cents on Friday. It rose to 57.11 Euro cents from 57.03 cents and gained to 48.97 British pence from 48.86. The trade weighted index rose to 68.86 from 68.72.


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