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NZ dollar charges higher

Thursday 14th July 2011

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The New Zealand dollar charged back to post-float high levels against the greenback, which tumbled broadly after Federal Reserve chief Ben Bernanke said the Fed could resort to more monetary stimulus if the United States economy weakened further.

Reuters data showed the kiwi peaking early today at US83.85c, having risen from US82.14c at 5pm. By 8am it remained elevated at US83.60c.

The NZ dollar was also up to 0.5910 euro at 8am from 0.5873 at 5pm, and was up to A77.80c against the Australian dollar from A77.35c.

BNZ strategist Kymberly Martin said that after a prolonged period focusing on offshore developments, the focus for the NZ dollar today should be on the long-delayed first quarter GDP release, due out at 10.45am.

"Expect the NZD to show a knee-jerk spike, to a new post-float high, if the number beats consensus expectations."

The US dollar hit a record low against the Swiss franc, and fell against the euro, in the wake of Bernanke's testimony.

Surprisingly strong Chinese growth data also helped overshadow worries about the euro zone debt crisis after Fitch Ratings said an ambitious Italian deficit reduction plan would help stabilize the country's credit rating.

The euro held gains even after Fitch downgraded Greece deeper into junk territory, citing the absence of a new and fully funded financing programme.

Bernanke, in testimony before a House of Representatives committee, said: "The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might re-emerge, implying a need for additional policy support."

The NZ dollar was also up to 66.02 yen at 8am from 65.30 at 5pm, while the trade weighted index rose to 72.13 from 71.39.

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