NZ dollar gains as better US data lifts stocks, risk appetite

Friday 17th February 2012

The New Zealand dollar rose after better-than-expected US manufacturing, housing and employment data pushed up stocks on Wall Street and boosted investors’ appetite for risk.

The New Zealand rose to 83.24 US cents just before 8.30am from 82.78 cents yesterday at 5pm in Wellington. The trade-weighted index advanced to 73.37 from 73.13.

The Standard & Poor’s 500 Index rose 1 percent to 1356.86 after US figures showed the fewest claims for unemployment benefits since 2008, stronger-than-expected January housing starts and manufacturing in the Philadelphia region expanding at the fastest pace in four months.

Signs of reviving growth in the world’s biggest economy reduced demand for the greenback as a haven and stoked demand for higher yielding, or riskier, assets including the kiwi.

“Support for the New Zealand dollar is in the mid 82 US cent zone was evident last night and remains in place today,” said Alex Sinton, senior dealer at ANZ New Zealand. The US data shows “increasing conviction the long-awaited labour market recovery is underway but a long road lies ahead.”

The kiwi sank more than 1 US cent in local trading yesterday on concern Greece’s rescue package will be put off until after the April election.

German newspaper Die Welt reported the European Central Bank will swap its 50 billion-euro Greek government bond holdings for new Greek bonds next week to plug a new financing gap in the second bailout program for the Mediterranean nation. These reports have not yet been confirmed.

In New Zealand, Reserve Bank Governor Alan Bollard is scheduled to give a speech today titled ‘Could We Be Better off than We Think?’, which may talk up New Zealand’s economy in relation to the rest of the world. The government will also deliver its accounts for first five months of fiscal year this morning.

The kiwi dropped to 77.31 Australian cents from 77.45 cents, having declined on Australian government figures yesterday showing the jobless rate fell to 5.1 percent as the economy stacked on 46,300 jobs last month. The figures damped speculation the Reserve Bank of Australia will cut interest rates to underpin growth.

The New Zealand dollar fell to 63.45 euro cents from 63.54 cents yesterday at 5pm and 52.69 British pence from 52.79 pence. It rose to 65.68 yen from 63.54 yen yesterday.

BusinessDesk.co.nz

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