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Dollar edges up before trade data and MPS

Wednesday 10th March 2010

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New Zealand’s dollar edged up against most currencies as the euro weakened and traders await local and Chinese trade data and the central bank’s release of its review of interest rates tomorrow.

The euro and the British pound weakened against the greenback after Fitch Ratings voiced concern about the UK’s credit profile and warned that Portugal was at risk of a credit rating downgrade. New Zealand’s terms of trade 2.5% in the fourth quarter, after declining 1.3% three months earlier, on a pick-up in exports, according to a Reuters survey. China’s trade data is scheduled for release this afternoon. Gains in prices of commodities such as copper also helped lift ‘commodity currencies,’ including the Australian and New Zealand dollars.

“The NZD took its cues from offshore, in particular the sharply weaker pound and euro,” said Mike Jones, currency strategist at Bank of New Zealand. A late rally in commodity prices also helped lift the currency he said.

Stronger than expected terms of trade has the potential to boost the kiwi further, Jones said. BNZ is predicting an 8.3% rebound.

The New Zealand dollar rose to 70.26 US cents from 69.82 cents late yesterday. It strengthened to 76.90 Australian cents from 76.76 cents and gained to 46.86 British pence from 46.60 pence.

The kiwi rose to 63.17 yen from 62.81 yen and rose to 51.68 euro from 51.34.The traded weighted index, or TWI, gained to 64.97 from 64.68.

Jones said the kiwi may trade in a range of 69.50 US cents to 70.80 cents today.

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