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NZ dollar holds at high levels vs greenback

NZPA

Monday 4th July 2011

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The New Zealand dollar held at high levels against the greenback as stronger than expected manufacturing data from the United States helped the Australasian currencies and lowered risk concerns.

Around 8am today the kiwi was buying US82.80c, close to the post-float high near US83.20c reached on Thursday. It fell against the Australian dollar to A76.78c from A77.17c at 5pm on Friday.

Data out overnight Friday showed growth in US manufacturing picked up for the first time in four months in June, surprising investors and fueling optimism a recent economic slowdown will be temporary.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 55.3 from 53.5 the month before, when it had slumped to its lowest level since September 2009. A reading above 50 indicates expansion in the manufacturing sector.

ANZ said optimism had returned with the ISM data, helping to lift the Australasian currencies and lowering risk concerns.

With Monday (local time) being Independence Day in the US, ANZ expected limited liquidity and activity in markets with the NZ dollar's recent post-float high being a difficult target to achieve.

The coming week is not expected to be as good for the euro as was last week, when Greece evaded a near-term default and investors embraced risk.

"The market turned a corner (last) week in terms of risk sentiment, but the market is also extremely near-sighted," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

"The longer term picture still stands and a Greece default is still very likely, with all the issues likely to arise again in September."

The NZ dollar was buying 0.5698 euro at 8am, little changed from its level at 5pm on Friday, while the kiwi was up to 66.95 yen from 66.72. The trade weighted index was 71.10 at 8am from 71.07 on Friday.



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