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Kiwi maintains gains on renewed global optimism

Wednesday 2nd February 2011

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The New Zealand dollar rose to its highest level against the greenback in more than two months as commodity and equity markets rose and fears eased about Egypt's political unrest.

There were so many positive factors for the NZ dollar it was difficult to work out which one was the driver on the day.

The NZ dollar was at US78.16c at 5pm, up from US77.97c at 8am and US77.42c at 5pm yesterday. The main move was on Tuesday night and the currency spent most of today consolidating around US78c.

There was strong result from the fortnightly Fonterra milk price auction overnight, which showed a further 7.2% surge in milk prices, following already strong gains this year. Prices were now up 16% to date this year.

This came after US equities rose to their highest level since June 2008 on strong corporate earnings and on data showing strong manufacturing activity.

The easing in the crisis in Egypt has also allowed investors to focus on positive economic data.

"It was a generally perky night for the NZ dollar and a solid dairy price auction added fuel to the fire," Mike Jones, currency strategist at BNZ, said.

The currency continued its perky performance today but there were few new factors to trade on. Investors are waiting for the household labour force survey tomorrow.

Markets have so far largely ignored the powerful Cyclone Yasi headed for Queensland.

The NZ dollar was at A77.14c at 5pm, from A77c at 8am and A77.36c at 5pm yesterday.

On a day in which the euro rose to its highest level in three months the NZ dollar was little changed at 0.5642 euro from 0.5640 euro yesterday.

Against the Japanese currency it was 63.65 yen from 63.45 yen yesterday.

The trade weighted index was 68.99 from 68.79 at the same time yesterday.



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