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NZ dollar gains near three-month high

Tuesday 24th January 2012

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The New Zealand dollar rose near a three-month high as a European Union meeting of finance chiefs quelled investors’ concerns about the region’s sovereign indebtedness amid speculation policymakers will make progress towards a deal to prevent a Greek default.

The kiwi rose as high as 81.42 US cents and traded at 80.97 cents at 8.30am from 80.66 cents yesterday. It fell to 62.23 euro cents from 62.56 cents yesterday at 5pm.

Investors were more upbeat about so-called risk-sensitive currencies amid speculation a meeting between EU finance ministers in Brussels would make fresh progress to help resolve the regions sovereign debt crisis as well as Greece’s negotiations with private bondholders. The bondholders have made their final offer to the EU and International Monetary Fund, and the parties are close to nearing an agreement where old bonds will be swapped for new securities.

“It is the moves around the euro that will guide the kiwi,” said Alex Sinton, senior dealer at ANZ New Zealand. “At the moment the kiwi doesn’t have the energy to go through into that 81.50 US cent mark.”

The kiwi last traded above 81.50 US cents in late October.

US Federal Reserve policymakers meet for the first time this year, with the Federal Open Market Committee releasing its monetary policy statement on Wednesday. The Fed is expected to continued pursuing a near-zero interest policy, and will include Federal funds rate forecasts for the first time.

The US is set for a heavy data week, with pending home sales, an initial reading on fourth-quarter growth, and January consumer sentiment all set for release.

Markets in China remain closed for spring holidays.

Official New Zealand data set for release this week includes, Reserve Bank credit card spending for December, set for release on Wednesday, the Official Cash Rate review on Thursday, followed by the BNZ-Business NZ Performance of Manufacturing Index on Thursday afternoon and December balance of trade statistics on Friday.

The New Zealand dollar was little changed at 76.85 Australian cents from 76.88 cents yesterday. It rose to 52.03 British Pence from 51.89 pence and gained to 62.34 yen from 62.12 yen.

The trade-weighted index was little changed at 71.65 from 71.63 yesterday.


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