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NZ dollar gains after Spain retains rating, as EU summit looms

Thursday 18th October 2012

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The New Zealand dollar rose after Moody's Investors Service affirmed Spain's investment grade credit rating, stoking risk appetite as traders position themselves ahead of the European Union summit starting Thursday in Europe.

The kiwi dollar rose to 82.17 US cents from 81.73 cents at 5pm in Wellington yesterday as the Spanish news helped stoke demand for high yielding, or riskier, assets. The trade-weighted index climbed to 72.93 from 72.70.

The US dollar fell against most of its trading peers as Spain kept its Baa3 debt rating, quashing speculation the indebted nation was going to be cut to junk. It comes as Spanish officials say the nation will decided on whether to seek help from the European Central Bank's bond buying fund within weeks. Chinese economic data out today and the EU summit are the main short-term risk factors for currency markets.

"Spain is still the top story in Europe because it's a trigger for the ECB bond intervention to start," said Imre Speizer , market strategist at Westpac Banking Corp. Traders "will be watching the screens from tonight" for any headlines out of the EU summit, he said.

The kiwi may trade in a range of 81.90 US cents to 82.65 cents today and the outlook for the currency is "positive over the next few days," he said.

The Standard & Poor's 500 Index rose 0.5 percent after Commerce Department figures showed

US housing starts jumped 15 percent last month to a seasonally adjusted annual rate of 872,000 units, beating forecasts. The Dow Jones Industrial Average weakened after International Business Machines and Intel posted disappointing earnings.

The kiwi dollar climbed to 64.89 yen from 64.34 yen and rose to 62.58 euro cents from 62.45 cents. It slipped to 79.15 Australian cents from 79.27 cents and rose to 50.87 British pence from 50.70 pence.

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