Kiwi pulls up from US75c level

Friday 18th February 2011

After flirting with the US75c level earlier this week, the New Zealand dollar pushed up to US76c overnight amid a broad decline by the greenback as Middle East tensions boosted the appeal of other safe-haven currencies, particularly the Swiss franc.

By 8am today the kiwi was buying US75.89c, having been above US76c in the previous hour, and after rising from US75.47c at 5pm yesterday.

BNZ strategist Kymberly Martin said the NZ and Australian dollars were beneficiaries of higher commodity prices overnight.

The NZ dollar continued to be torn between the positive impact of strong and rising global commodity prices, and the negative impact of near-term weakness in domestic data.

The weak patch of domestic New Zealand data continued to result in an interest rate differential that favoured the Australian dollar relative to the NZ dollar.

Westpac senior market strategist Imre Speizer said the NZ dollar bounce looked corrective, and should fade before US76.80c.

Popular unrest in Bahrain, Libya and Yemen as well as concerns about Iranian warships transiting the Suez Canal had fostered uncertainty among international investors in recent days.

A myriad US economic data, meanwhile, weighed on financial market sentiment. The Philadelphia Federal Reserve said Mid-Atlantic business activity improved sharply in February while US inflation and weekly claims for jobless benefits came in higher than expected.

The NZ dollar fell to a seven-week low against its Australian counterpart around US74.90c early today and was hovering only slightly above that level around 8am, down from A75.24c at 5pm.

The kiwi rose to 0.5585 euro at 8am from 0.5557 at 5pm, and lifted to 63.30 yen from 63.10. The trade weighted index lifted to 67.59 at 8am from 67.37.

NZPA

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