The New Zealand dollar climbed above 82 US cents for the first time in more than three months as stocks on Wall Street and commodity prices rallied, extending last week's upbeat sentiment on the prospect Spain will seek regional funding to shore up its ailing finances.
The kiwi rose as high as 82.22 US cents, and traded at 81.96 cents at 8.30am in Wellington from 81.86 cents yesterday. The trade-weighted index advanced to 73.56 from 73.49 yesterday.
Investor optimism continued during the Northern Hemisphere session with Wall Street's Standard & Poor's 500 Index up 0.2 per cent, and the Thomson Reuters/Jefferies CRB index, a broad measure of commodity prices, up 0.4 per cent. That stoked appetite for the trans-Tasman currencies ahead of the Reserve Bank of Australia's monetary policy review, where policymakers are expected to keep the target cash rate unchanged at 3.5 per cent.
"Equities pushed higher and commodity prices are still strong, prompting the kiwi and Aussie to lead most majors as they grind higher," said Mike Jones, currency strategist at Bank of New Zealand, referring to the trans-Tasman currencies colloquially. "Investors are sitting on the side-lines ahead of the RBA, and liquidity's the thing as European holidays get underway."
Traders shrugged off reports New Zealand's Mount Tongariro erupted for the first time in more than a century, with no injuries or damage reported. Civil Defence has issued a potential threat notice for regions in the central North Island, but the National Crises Management Centre hasn't been activated.
