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Kiwi pushes to U80.7c

Wednesday 27th April 2011

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The New Zealand dollar pushed up to US80.7c for the first time in more than three years, as the greenback weakened broadly.

BNZ currency strategist Mike Jones noted that on a trade-weighted basis, the New Zealand currency remained well below the highs of 2010, and even those of 2011.

That was an indication of the extent to which US dollar weakness was contributing to NZ dollar strength, Mr Jones said.

The kiwi pushed up overnight from around US80c at 5pm to US80.7c at 8am, with the trade-weighted index lifted to 69.12 from 68.81.

The NZ dollar also pushed up to 65.79 yen at 8am from 65.34 at 5pm, while being little changed at A74.85c against the Australian dollar and at 0.5511 euro.

The euro vaulted to a 16-month high against the US dollar, with no respite in sight seen for the greenback as long as the US Federal Reserve continues to lag other major central banks in raising interest rates.

The Federal Reserve's policy making arm, the Federal Open Market Committee, is starting a two-day meeting which will be followed by a news conference with Fed chairman Ben Bernanke - the first regularly scheduled news briefing by a Fed chief in the US central bank's 97-year history.

That conference will be closely watched to see how the Fed plans to exit from its ultra-loose policy.

Jones said if global commodity prices continued their recent ascent, there was every chance of a test of the NZ dollar's post-float high of US82.13c in coming sessions.

If the Fed stuck to the script tomorrow morning - rates on hold, quantitative easing to finish in June, and no chance of near-term policy tightening - there would be little to disrupt the broad themes of bubbly risk appetite and US dollar weakness that had been underpinning financial markets.

A busy afternoon was expected today, with Australian inflation figures due at 1.30pm (NZT), followed by the National Bank business confidence survey at 3pm.

 

NZPA



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