NZ dollar gains to 80 US cents as Bernanke sees slow EU progress
The New Zealand dollar rose against the greenback and returned to record levels versus the euro after Federal Reserve chairman Ben Bernanke told the US House that Europe isn't close to a long-term solution to its debt crisis and left markets pondering the prospects for more quantitative easing.
The kiwi dollar climbed to 79.99 US cents, and earlier reached as high as 80.06 cents, from 79.63 cents at 5pm in Wellington yesterday. The local dollar rose to 65.12 euro cents, and earlier reached a record 65.25 cents, from 64.80 cents yesterday.
Bernanke said the Fed would follow a similar pattern to previous times when it has provided stimulus to the economy then "pulled back, took away the punch bowl" when growth returned. He was speaking as the Fed released its Beige Book business survey, which said the world's biggest economy grew at a "modest to moderate" pace in June and early July. Helping lift sentiment, US housing starts rose 6.9 percent last month.
"Bernanke is a master at developing a credible threat before delivering," said Peter Cavanaugh, senior client adviser at Bancorp Treasury Services.
The Australian and New Zealand dollars are underpinned by trade ties to China and their relatively high yields, though the kiwi may struggle to gain much more from 80 US cents, he said. Stocks gained in the US as earnings season delivered more results that beat estimates
Investors will be watching the results of government bond sales in Europe through the end of the week. An auction of German bunds due in 2014 drew a negative yield for the first time as the nation allotted 4.17 billion euros of the debt at an average rate of minus 0.06 percent at today's sale, according to Bloomberg.
The trade weighted index rose to 72.31 from 72.15. The kiwi rose to 51.08 British pence from 50.86 pence yesterday and edged up to 62.97 yen from 62.91 yen. The kiwi fell to 77.11 Australian cents from 77.21 cents.
Comments from our readers
No comments yet
Add your comment:
NZ dollar gains before CPI, helped by dairy gains, rally on Wall Street
NZ dollar trades little changed as US budget talks bear down on deadline
NZ dollar falls with equities on view US to sail over fiscal cliff
NZ dollar weakens as fiscal cliff looms, long bets unwind
NZ dollar sinks to three-week low as equities fall, fiscal talks in focus
NZ dollar slips as fiscal cliff talks grind slower in Washington
NZ dollar falls ahead of GDP report as global risk sentiment wanes
NZ dollar drops vs. euro after Greek upgrade, Spanish debt sale
NZ dollar holds above 80 Australian cents as RBA, half-year update loom
NZ dollar surges to 4-year high vs. yen as Japan’s LDP sweeps to victory