NZ dollar recovers after knee-jerk decline on Greece concerns

Tuesday 30th June 2015

The New Zealand dollar advanced overnight following a knee-jerk decline yesterday after no agreement was reached between Greece and its creditors at the weekend.

The kiwi gained to 68.60 US cents at 8am in Wellington, from 68.33 cents at 5pm yesterday and 68.15 cents at 8am yesterday. The trade weighted index was little changed at 71.70 from 71.69 yesterday.

Even though Greece isn't expected to make a 1.55 billion euro payment to the International Monetary Fund due today, currency markets overnight unwound some of the immediate rush out of the euro, which also benefited the kiwi. Meanwhile, European leaders said Greece’s planned referendum vote on the bailout plan this weekend was a choice for Greek voters on remaining with the euro.

"Markets unwound some of their initial ‘knee-jerk’ response following the breakdown in negotiations between Greece and its creditors," ANZ Bank New Zealand senior economist Mark Smith and senior FX strategist Sam Tuck said in a note. "Market serenity has returned, viewing the contagion impacts of Greece’s actions as being limited."

ANZ expects the kiwi to trade between 68.10 US cents and 69.30 cents today.

May building consent data and ANZ's monthly business confidence survey are scheduled for release today.

The New Zealand dollar sank to 60.99 euro cents from 62.05 cents yesterday, weakened to 89.22 Australian cents from 89.31 cents, edged higher to 43.60 British pence from 43.50 pence and gained to 84.02 yen from 83.79 yen.

BusinessDesk.co.nz

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