NZ dollar jumps 1 US cent overnight as riskier assets return to favour

The kiwi was little changed at 84.15 US cents at 8am in Wellington from 84.13 cents at 5pm yesterday.

The New Zealand dollar jumped 1 US cent overnight as investors gained back some confidence in economic growth, favouring riskier assets such as equities and higher yielding currencies.

The kiwi touched a week-high of 82.25 US cents and was trading at 82.16 cents at 8am in Wellington from 80.94 cents at 5pm yesterday. The trade-weighted index advanced to 77.57 from 76.58.

Investors returned to riskier assets overnight, pushing up emerging market currencies and damping demand for safe haven investments such as the yen. Demand for higher growth assets pushed up US 10-year yields while bargain hunting investors stabilised stock markets.

"We have seen a reduction in risk aversion overnight," said Stuart Ive, senior advisor at OMF.

The kiwi jumped to 83.42 yen from 81.91 yen yesterday.

The New Zealand dollar rose to 91.94 Australian cents from 91.46 cents yesterday. Traders said the kiwi is riding the coat tails of a higher Aussie after the Reserve Bank of Australia yesterday removed its easing bias, meaning it is unlikely to cut rates further this cycle.

A 1.4 per cent rise in whole milk powder in the latest GlobalDairyTrade auction this morning is also helping bolster the kiwi.

Today, traders will be eyeing a report on New Zealand fourth quarter employment, with the nation's unemployment rate expected to drop to 6 per cent from 6.2 per cent.

Tonight, the focus will be on the US ADP employment report ahead of the key non-farm payrolls report on Friday.

The local currency advanced to 60.76 euro cents from 59.91 cents yesterday and gained to 50.32 British pence from 49.66 pence.