NZ dollar holds steady as risk sentiment improves on optimism about China, Greece

File photo / NZ Herald

The New Zealand dollar was little changed as risk sentiment improved following a bounce in Chinese equities and as Greece submitted new proposals for its creditors ahead of talks this weekend.

The kiwi traded at 67.28 US cents at 8am in Wellington, from 67.31 cents at 5pm yesterday.

The trade-weighted index was at 71.12 from 71.03 yesterday.

Investor sentiment towards more risky assets improved as Chinese stocks rallied after the country's regulator banned key shareholders from selling for the next six months in an effort to stem a four-week plunge.

Meanwhile, Greece was working to meet a midnight deadline to submit a new austerity plan in return for more financial help. European leaders are set to gather and decide on the new proposal on Sunday with pressure rising on Germany to concede on granting debt relief.

"Risk appetite improved overnight, in part thanks to a (somewhat misleading) bounce in Chinese equity prices," Bank of New Zealand currency strategist Raiko Shareef said in a note.

"Whatever the case, global investors took some heart from the headline gains."

In Greece, "the mood music certainly seems to have improved, with Greece's new finance minister credited with bringing a much more constructive approach," he said.

For the kiwi, a continued improvement in risk appetite will likely see the currency test 68 US cents heading into the end of the week, Shareef said.

Tonight, the focus will be on a speech on the economic outlook by Federal Reserve chair Janet Yellen. Investors will be looking for any clues about the timing of an interest rate hike.

The New Zealand dollar increased to 90.30 Australian cents from 90.10 cents yesterday, gained to 61.02 euro cents from 60.76 cents, was unchanged at 43.75 British pence and slipped to 81.60 yen from 81.67 yen.