Tuesday 29th November 2011
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The New Zealand dollar rose as optimism that European leaders are making progress on plans to resolve the region’s sovereign debt crisis helped global equity markets and commodities to rally.
The kiwi dollar was at 75.51 US cents just before 8am, up from 75.03 cents at 5pm yesterday.
Germany and France are pushing for powers to reject national budgets within the euro zone that don’t comply with European Union rules, a form of fiscal union that could strengthen the region’s ability to avoid recession, Reuters reported.
“Policy makers are working hard in the background to find a solution,” said Mike Jones, market strategist at Bank of New Zealand. There is a meeting between European Union leaders tonight and one next week and the markets will be looking to these meetings for certainty, he said.
The National Bank Business Outlook survey yesterday showed business confidence improved this month, stoking optimism the economy is gaining pace and potentially reducing the prospects for the central bank to cut the official cash rate from a record low 2.5 percent, as traders are speculating.
Traders see 25 basis points of cuts to the OCR in the next 12 months, based on the Overnight Index Swap curve. That’s the first time since March they haven’t been betting on higher interest rates.
The kiwi dollar rose to 58.88 yen from 58.25 yen yesterday, it gained to 56.62 Euro cents from 56.39 cents and was up 48.67 British pence from 48.36 yesterday. It dropped to 76.17 Australian cents from 76.26 cents.
The trade weighted index rose to 67.21 from 67.15 at 5pm yesterday.
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