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Kiwi climbs above US76c amid upbeat US earnings

Thursday 14th October 2010

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The New Zealand dollar climbed above 76 US cents as stocks on Wall Street gained on American companies' third-quarter earnings that beat analysts' forecasts.

Investors' appetite for higher-yielding, or riskier, assets rose as investment bank JP Morgan lifted third-quarter profit by 23%, beating forecasts.

The Standard & Poor's 500 index rose 0.7% with railroad operator CSX and chip-maker Intel also beating earnings expectations. Global data helped underpin the lift in risk appetite, with China's trade surplus at US$17 billion and European industrial production lifting on a rise in capital goods output.

"It was a pretty positive night for sentiment with risk appetite in good heart, which helped stoke demand for growth sensitive currencies," said Mike Jones, strategist at Bank of New Zealand.

"There was a broad-based lift in risk appetite and the kiwi went within a whisker of reaching a 27-month high" at 76.40 US cents, he said.

The kiwi climbed to 76.08 US cents from 75.52 cents yesterday, and increased to 67.44 on the trade-weighted index of major trading partners' currencies from 67.06. It gained to 62.20 yen from 61.86 yen yesterday, and advanced to 76.78 Australian cents from 76.18 cents. It rose to 54.50 euro cents from 54.09 cents yesterday, and was up to 47.87 pence from 47.61 pence.

Jones said the currency may trade between 75.40 US cents and 76.40 cents today, with August consumer spending data, last month's housing and manufacturing data posing potential risks to the kiwi if a rogue number is reported.

Chinese foreign exchange reserves rose by US$194 billion in the three months through September to US$2.65 trillion, the fastest ever quarterly gain. That's adding pressure to the world's second biggest economy to let the yuan appreciate ahead of next month's Group of 20 nations summit in Seoul.

Germany's Economy Minister Rainer Bruederle said the US hadn't controlled its competitiveness problems, and that the so-called "currency wars", where countries are vying for a weaker currency to stoke exports, wasn't all China's fault, AFP reported. "At the moment I have more criticism of the American Treasury secretary than of China," Bruederle said

The Russian Central Bank announced it will widen the so-called floating corridor it uses to guide the ruble against a basket of currencies to 4 rubles from 3. It also said it was scaling back its currency interventions. The kiwi rose to 22.89 rubles from 22.76 yesterday.

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