The New Zealand dollar rose above 95 Australian cents as falling oil prices weigh on the Australian economy, whose exports are largely hard commodities such as iron ore and precious metals.
The kiwi rose to 95.23 Australian cents at 5pm in Wellington from 94.94 cents yesterday. It was little changed at 77.37 US cents from 77.24 cents at 8am and 77.49 cents yesterday.
ICE Brent Crude prices rose 1.1 percent to US$60.75 a barrel, unwinding some of the commodity's recent drop as investors monitor the amount of global supply after Saudi Arabia said it won't reduce production in the face of falling prices. The drop in oil prices has weighed on commodity-linked currencies, and created a divergence between assets exposed to soft commodities, such as food producing New Zealand's dollar, and those in hard commodities, such as Australia's resources dominated export economy.
"Investors want to get out of commodity currencies," said Alex Hill, head of corporate FX at NZForex in Auckland. "The kiwi's still looking fairly resilient compared to the Aussie and it's definitely outperforming, which is why I think the kiwi/Aussie is stretched."
Traders are waiting for the third reading of US gross domestic product in Washington on Tuesday, which is expected to show the world's biggest economy grew at an even faster pace than previously estimated. The country's strong run of economic data has fuelled expectations the Federal Reserve will start hiking interest rates next year, having run near zero policy since the global financial crisis, and traders are betting the central bank will hike the federal funds rate 31 basis points over the coming 12 months from its zero to 0.25 percent band, according to the Overnight Index Swap curve.
