NZ dollar inches up as Greece gets EU bailout

Photo / NZ Herald

The New Zealand dollar inched up against the greenback after European finance ministers approved a 12-billion euro loan to Greece, easing market fears of default.

The loan, which was the fifth tranche of funds under the original 110 billion euro bailout package, came after Greek parliamentarians approved a tough round of austerity last week - a move demanded by European authorities in a carrot-and-stick effort to get the Mediterranean country to tackle its sovereign debt crisis.

Still, finance ministers warned the deeply unpopular measures would be tough to implement.

That tempered gains in so-called risk-sensitive currencies in the New York session on Friday, when equities rose on the back of stronger-than-expected manufacturing data.

Activity levels on the ISM Manufacturers Index for June came in at 55.3 versus a market forecast of 52. On Wall Street, the Standard and Poor's closed 1.4 per cent higher at 1339.65.

"The market is looking at Greek optimism versus reality, and while the kiwi and the Aussie may look to test topside levels on the back of that, you've got to be very weary of implementation of those packages," said Alex Sinton, a senior dealer at ANZ New Zealand, referring to the trans-Tasman currencies colloquially.

The kiwi rose to 82.70 US cents from 82.67 cents on Friday in New York, and was unchanged at 71.12 on the trade-weighted index of major trading partners' currencies. It fell to 76.76 Australian cents from 77.12 cents last week, and rose to 66.97 yen from 66.75 yen. It gained to 56.98 euro cents from 56.95 cents on Friday, and fell to 51.52 pence from 51.64 pence previously.

The government is set to release its three-year plan for national infrastructure in parliament today, a list of priorities and a stock-take of the spending to come in the next three to four years. The plan is aimed at improving planning and co-ordination between central and local government and with private providers.

The kiwi may trade in a range of 82.40 cents and 83.20 cents, Sinton said, with activity on currency markets likely to be limited by the Independence Day holiday in the U.S.