NZ dollar extends gains to highest level in more than a week on commodity rally, weak greenback

Tuesday 12th April 2016

The New Zealand dollar extended its gains to the highest level in more than a week as commodity prices rose and the greenback hovered near a six-month low against a basket of currencies.

The kiwi rose to 68.83 US cents as at 5pm in Wellington, from 68.58 cents at the start of the day and from 68.17 cents yesterday. The trade-weighted index advanced to 72.52 from 71.99 yesterday.

The CRB Index, which measures a basket of global commodities, has climbed to its highest level this month, helping lift commodity-linked currencies including the kiwi and the Australian dollar, which also benefitted from a stronger-than-expected reading in the National Australia Bank business confidence survey. The US dollar index, which measures the greenback against other key currencies, has fallen to its lowest level since October last year on speculation the Federal Reserve won't rush to raise US interest rates again this year.

"Commodity currencies have been kicked into life in the last 24 hours and it looks like that will continue," said Martin Rudings, a senior dealer at OMF. Still, "the US dollar may have run out of momentum on the downside," he said.

The New Zealand dollar fell to 90.11 Australian cents from 90.27 cents at the start of the day, to be little changed from 90.09 cents yesterday. The kiwi shed earlier gains against its Australian counterpart after the NAB survey showed business conditions were at their highest level since before the global financial crisis while an employment gauge also gained.

"We think that business confidence is likely to help the Australian dollar going into Europe tonight and the commodity currency rally will extend itself tonight," Rudings said.

Helping the kiwi dollar today, Real Estate Institute figures showed house sales and turnover reached record highs in March while government figures showed guest nights rose for the 23rd straight month, underlining the nation's tourism boom.

The New Zealand dollar rose to 60.34 euro cents from 59.73 cents yesterday and gained to 4.4502 yuan from 4.4065 yuan. It rose to 74.45 yen from 73.50 yen and traded at 48.31 British pence from 48.20 pence.

The two-year swap rate rose 1 basis point to 2.2 percent and 10-year swaps climbed about 3 basis points to 2.93 percent.

BusinessDesk.co.nz

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