Sharechat Logo

NZ dollar 'outperforms' as resurgent fears about Greece sap risk appetite

Thursday 8th April 2010

Text too small?

The New Zealand dollar “outperformed” overnight amid resurgent fears about Greece’s sovereign debt issues, and following a 21% surge in dairy prices on Fonterra’s online trading auction yesterday.

The spread between Greek and German 10-year government bonds reached a record 412 basis points as fears about the state of the Mediterranean nation’s fiscal position re-emerged after Greek banks asked for more financial support.

Equity markets were downbeat with stocks on Wall Street and in Europe declining while the Euro-zone fourth quarter GDP was revised down to zero growth from 0.1%. Still, the kiwi gained 0.3% against the greenback as investors were impressed with the jump in dairy prices on the online globalDairyTrade trading platform.  

“The kiwi outperformed with residual support from the Fonterra auction,” said Imre Speizer, markets strategist at Westpac Banking Corp. “People are starting to slowly wake up to the fact that the kiwi economy is grinding forward.” 

The kiwi rose to 70.72 US cents from 70.54 cents yesterday, and edged up to 65.82 on the TWI, a trade-weighted index of major trading partner currencies, from 65.72. It dropped to 66.01 yen from 66.31 yen yesterday, and inched up to 76.18 Australian cents from 76.14 cents. It increased to 52.96 euro cents from 52.70 cents yesterday, and slipped to 46.37 pence from 46.42 pence.  

Speizer said the currency may trade between 70 US cents and 71 cents today, with Australia’s March employment data likely to be the main risk. Any negative surprise would have a greater impact on the trans-Tasman currencies than a positive one, he said.  

The kiwi has come back from its nine-and-a-half year low on the Australian cross, and Speizer says investors slowing unwinding their holdings in Australian dollars after doing “bloody well over the last couple of months.” 

The People’s Bank of China announced its first sale of three-year bills since 2008, a move ANZ New Zealand economists say is being seen as a liquidity tightening measure and signals interest rate hike. Meanwhile, speculation is growing that China will relax its pegging of the yuan to the greenback. 

  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