NZ dollar rises against yen as global sentiment improves

Monday 20th October 2014

The New Zealand dollar gained against the Japanese yen as improved US economic data bolstered sentiment on global growth, prompting investors to reduce holdings of safe haven currencies such as the yen.

The kiwi rose to 84.73 yen at 8am in Wellington, from 84.15 yen at 5pm on Friday. The local currency was little changed at 79.22 US cents from 79.12 cents at the New York close and 79.27 cents on Friday.

Equities rose on both sides of the Atlantic at the end of last week amid better-than-expected earnings results from companies such as from Morgan Stanley and General Electric. Positive sentiment about the outlook for growth was bolstered after US data on new housing starts beat expectations and US consumer confidence unexpectedly rose to the highest since July 2007.

"Some relative calm returned to markets on Friday evening," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. "US data calmed some jangled nerves."

The yen was the worst performing major currency "as the improvement in general risk sentiment undermined the 'safe haven' bid for the currency," she said.

Some investors were also buoyed by a report in the Wall Street Journal at the weekend that China's central bank plans to inject 200 billion yuan into the banking system to bolster the world's second-largest economy amid concerns it could miss its 7.5 percent growth target for this year.

In New Zealand this week, the focus will be on third-quarter inflation data scheduled for release on Thursday. The kiwi will probably trade between 78.50 US cents and 80 cents ahead of the data, BNZ's Martin said.

Today, the BNZ-BusinessNZ Performance of Services Index and the ANZ-Roy Morgan Consumer Confidence Index are scheduled for release.

The New Zealand dollar slipped to 90.45 Australian cents from 90.60 cents on Friday. Reserve Bank of Australia assistant governor (economic) Christopher Kent is speaking at an aged services conference in Adelaide while Chris Aylmer, the bank's head of domestic markets, is speaking at a small to medium business conference in Melbourne.

The local currency advanced to 62.09 euro cents from 61.94 cents on Friday, and slipped to 49.21 British pence from 49.31 pence. The trade-weighted index gained to 76.92 from 76.84 on Friday.

BusinessDesk.co.nz

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