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NZ dollar gains as risk sentiment improves, greenback weakens

Friday 5th January 2018

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The New Zealand dollar rose to its highest levels in more than two months as improving risk sentiment and rallying stock markets stoked demand for growth-linked currencies.

The kiwi rose to 71.53 US cents as at 8am in Wellington, the highest since late October, from 70.97 cents late yesterday. The trade-weighted index climbed to 74.31 from 73.87.

The Chicago Board Options Exchange Volatility Index (VIX), known as Wall Street's fear gauge, is hovering near its lowest levels in more than a decade touching 8.93 overnight, while the Dow Jones Industrial Average rose above 25,000 for the first time, stocks in Europe rallied and the CRB Index of 19 commonly traded commodities equalled its highest level in almost 12 months. The greenback had briefly gained earlier after figures showed stronger-than-expected private-sector jobs growth.

“We have decent expectations for global growth and global risk assets and, when you have above-potential global growth, the (US) dollar tends to weaken because people don’t need to hold safe-haven dollars,” BMO Capital Markets currency strategist Stephen Gallo told Reuters.

US private employers added 250,000 jobs in December, according to the ADP Research Institute, beating estimates of 190,000 jobs and stoking speculation official employment figures due out on Friday in the US will also be robust. A Labour Department report, due on Friday, is expected to show that nonfarm payrolls rose by 190,000 jobs in December, according to separate polls by Bloomberg and Reuters. 

The kiwi dollar rose to 52.82 British pence from 52.49 pence yesterday and gained to 59.28 euro cents from 59.05 cents. It advanced to 91.01 Australian cents from 90.59 Australian cents, rose to 80.69 yen from 79.94 yen and traded at 4.6427 yuan from 4.6177 yuan.


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