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Kiwi pushes to within a whisker of US80c

Monday 18th April 2011

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The New Zealand dollar climbed to within a whisker of US80c, its highest level against the greenback in three years.

From US79.44c at 5pm on Friday, the kiwi peaked on Saturday morning at US79.99c, according to Reuters data, and by 8am today was at US79.87c.

ANZ bank said the failed attempt to take out US80c, followed by only a marginal reversal to end the trading week, would leave markets wanting to try a move higher early today.

The NZ dollar had been unstoppable overnight Friday and, along with the Australian dollar, ignored a poor performance by the euro.

Consumer price inflation data due out at 10.45am would be the local focus today, with risks that it would be higher than expected, ANZ said.

Central banks in general were on the watch against inflation, and some were on the "warpath".

The NZ dollar peaked at an eight-week high 0.5545 euro early Saturday, easing to 0.5541 at 8am today, up from 0.5488 at 5pm on Friday. The kiwi was around an eight week high against the Australian dollar, buying A75.72c at 8am today from A75.43c at 5pm on Friday.

The NZ dollar also rose to 66.39 yen at 8am today from 66.28 at 5pm on Friday, with the trade weighted index up to 69.26 from 68.90.

The euro slipped broadly but its uptrend of the past three months still looks intact, with the prospect of more interest rate rises from the European central bank seen offsetting concerns about the ability of some poorer euro zone countries to pay their debts.

The euro is up nearly 8% against the US dollar and 10.4% versus the yen in 2011, helped by interest rate differentials.

Inflation accelerated in Europe and Asia in March while the US bucked the global trend with underlying price pressures largely in check, leaving monetary policy set by the European Central Bank and the Federal Reserve diverging paths .

"The concern is rising oil and commodity prices and I fear that consumers will get spooked enough to dramatically lower spending, which will make US economic growth even weaker," said Bruce McCain, senior vice president and chief investment strategist at Key Private Bank in Cleveland, Ohio.

That could push Federal Reserve interest rate rises even further down the road, he said.



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