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Kiwi consolidates above US79c

Monday 9th May 2011

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The New Zealand dollar consolidated above US79c today and rose against a euro weakened by worries about European sovereign debt.

The New Zealand dollar was at US79.28c at 5pm from US79.10c at 8am and US78.62c at 5pm on Friday. It started rising early on Saturday, peaking around US79.70c after data showed employers in the United States added 244,000 jobs last month, well above what economists had expected.

Rankin Treasury said the NZ dollar will struggle to regain the US80c level unless the euro or Australian dollar take off again.

The Government's budget is due next week, and the level of debt is likely to be a focus for commentators.

The NZ dollar rose strongly against the European currency, peaking at its highest level in nearly three weeks around 0.5526 euro on Saturday. At 5pm the New Zealand dollar was at 0.5504 euro from 0.5502 at 8am and 0.5403 at 5pm on Friday.

The euro was weakened by speculation that Greece may be exploring ways to exit the European Union, restructure its debt and revert to using the Drachma as a currency.

Rankin Treasury said the euro, which was already under selling pressure due to the corrections in other markets, saw even more selling even as these rumours were quickly denied.

"So that leaves the markets again worrying about risk and again doubtful of the euro strength in recent weeks," Rankin Treasury said.

Westpac said that trading in financial markets on Friday confirmed that risk sentiment started reversing, raising the odds of a continued bounce in the US dollar, further falls in commodities, and further falls in risky currencies such as the NZ dollar during the weeks ahead.

The NZ dollar was at A73.56c at 5pm from A73.80c at 8am today and A73.57c at 5pm on Friday. It was at 63.84 yen from 63.73 yen at 8am and 63.29 yen on Friday. The trade weighted index was at 68.16 from 67.54 on Friday.



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