Kiwi tops US79c

Thursday 14th April 2011

The New Zealand dollar rose above US79c for the first time in five months, as it closed in on the November high around US79.75c.

From US78.54c at 5pm yesterday, the kiwi peaked near US79.30c early today before falling away to US78.86c at 8am.

ANZ said the NZ dollar had broken out overnight to score on all fronts. It was impossible to contain as it trounced opposing currencies with relative ease.

Despite that, a return to the overnight highs today looked a little distant and out of reach from today's starting point.

The NZ dollar was also up to 0.5460 euro at 8am from 0.5426 at 5pm, while being little changed at A75.05c against the Australian dollar and 66.08 yen. The trade weighted index rose to 68.50 at 8am from 68.30 at 5pm.

The US dollar gained against the euro after President Barack Obama set a goal to cut the US budget deficit, but it failed to reverse bearish sentiment driven by unfavourable interest rate differentials.

President Obama set a goal of cutting the US budget deficit by US$4 trillion (NZ$5.07tr), plunging into the debate over the nation's fiscal woes after accusations he has failed to lead on the issue.

"The fiscal austerity Obama is planning to introduce is being received positively and there is optimism on the US economy," said Kathy Lien, director of currency research at GFT in New York. "But it's not enough to cause a full reversal in the US dollar."

Sentiment toward the US dollar remains overwhelmingly bearish, largely due to expectations the US Federal Reserve will significantly lag global central banks in raising interest rates.

NZPA

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