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Kiwi holds around two-month highs above US78c

Monday 11th April 2011

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The New Zealand dollar held around two-month highs against the greenback above US78c, as the US currency was pressured while the White House and Congress worked frantically to break a US budget deadlock.

A last-minute budget deal, announced mid-afternoon Saturday (NZT), averted an embarrassing US government shutdown, cut $US38.5 billion ($NZ49.2b) in spending and provided the first major test of the divided government that voters ushered in five months ago.

By 8am today the NZ dollar was buying US78.26c, little changed from its level at 5pm on Friday.

ANZ bank said the NZ dollar had "an almost too strong finish to the trading week", as demand out of the US continued to push the Australasian currencies higher.

The kiwi now lay just beneath tough topside levels.

The NZ dollar also slipped to A74.14c at 8am today from A74.29c at 5pm on Friday, and dropping to 0.5414 euro from 0.5436, while being little changed at 66.52 yen. The trade weighted index dropped to 68 from 68.13.

The euro rose to a 15-month peak versus the US dollar in the overnight Friday session, peaking around US$1.4465, with the European currency boosted by expectations of higher eurozone interest rates, as concerns about a US government shutdown had weighed on the greenback.

"The market is ignoring all of Europe's fiscal and banking troubles and trading off a single indicator - interest differentials," said Avery Shenfeld, chief economist at CIBC World Markets in Toronto.

 

NZPA



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