NZ dollars adds to yesterday's gains

NZPA

Wednesday 25th May 2011

The New Zealand dollar overnight added to gains made yesterday after Fonterra lifted its forecast season payout by 10c and inflation expectations rose unexpectedly.

At 8am the kiwi was buying US79.79c from US79.54c at 5pm, and for a short time around midnight topped US80c.

The NZ dollar also rose to A75.56c at 8am against the Australian dollar from A75.39c at 5pm, and was unchanged at 0.5655 euro, having peaked at a 15-week high 0.569 overnight.

The euro pulled away from a two-month low against the US dollar after better-than-expected data on German business sentiment, but traders said fears about Greece's finances and Europe's spreading debt crisis continue to cast a long shadow of doubt.

Traders said the chance that Greece may restructure its debt would keep the euro under pressure. Markets were also fretting about the finances of Spain and Italy.

ANZ bank said selling of risk assets had subsided and commodity currencies had outperformed, with the NZ dollar leading the pack.

With the New Zealand economy looking as if was on a better footing than initially expected, the economic dataflow could start to surprise to the upside in coming months, ANZ said.

That could see the NZ dollar continuing to outperform, particularly as some global indicators showed a slowing in growth momentum.

The kiwi rose to 65.37 yen at 8am from 65.05 at 5pm, while the trade weighted index lifted to 69.48 from 69.34.

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