Sharechat Logo

Dollar climbs to month-high after Spanish bond sale

Friday 18th June 2010

Text too small?

The New Zealand dollar climbed above 70.50 US cents for the first time in a month after robust demand for the latest government bond sales in Spain eased concerns about Europe's sovereign debt crisis.  

Spain secured good demand for its sale of 3.5 billion euros of 10-year and 30-year government bonds, and its spreads over German bunds narrowed, helping pare investors' nervousness about fiscal problems in the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain).

Stocks on Wall Street rose in late trading, though American data was poor with an increase in jobless claims to 472,000, and a slump in the Philadelphia Federal Reserve business outlook. The kiwi climbed to its highest level since May 17 as investors felt more comfortable about putting their cash into higher-yielding, or riskier, assets.  

"The bank auctions are going quite well, and helped boost investor sentiment - there's a lot of cash in safe haven assets that's starting to be put to work," said Khoon Goh, senior markets economist at ANZ New Zealand.

"The kiwi went back past 70 US cents, which was quite a big resistance level, and managed to hang on in there, benefiting from the return to risk."  

The kiwi rose to as high as 70.61 US cents from 70.10 cents yesterday, and was recently at 70.46 cents. It advanced to 67.64 on the trade-weighted index of major trading partners' currencies from 67.50. The kiwi was unchanged at 63.97 yen, and increased to 81 Australian cents from 80.91 cents yesterday. It rose to 56.74 euro cents from 56.59 cents yesterday, and edged up to 47.43 pence from 47.33 pence.  

Goh said the currency may trade between 69.90 US cents and 70.70 cents today, and will track Asian equities today with little news scheduled in Australia and New Zealand. ANZ economists expect the currency will track in the high 60s and low 70s this year, and Goh said he was "pretty comfortable" with its level.  

Last month's UK retail sales beat forecasts, coming in at 0.6% growth from April, and helped support the British currency, which climbed to a month high 1.4828 US dollars per pound stirling. Bank of England Governor Mervyn King has indicated the central bank will start raising interest rates before it sells bonds, though this may be some time off with inflation pressures curbed by the economic slump.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar gains on G20 preference for growth
NZ dollar dips as Wellington CBD checked for quake damage
NZ dollar gains, bolstered by RBA minutes, strong dairy prices
NZ dollar falls after central bank says it may scale up currency intervention
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