NZ dollar jumps against Aussie

File photo / NZ Herald

The New Zealand dollar strengthened against the Australian currency, following the weekend's inconclusive election result across the Tasman then drifted back.

The Australian dollar slid on political uncertainty after neither of the major parties won a majority in Saturday's election but recovered as markets speculated that a minority conservative government will ultimately be formed.

"In the short-term the Australian dollar may struggle to get any upward traction but in reality both political parties in Australia have very similar agendas so the real influences are external - not internal," said Rankin Treasury.

After dropping to around A79c on Saturday morning, the NZ dollar shot up to A79.59c at 8am and then drifted lower. By 5pm it was A79.21c from A79.18c at 5pm on Friday.

The Australian dollar was buying US89.13c at 5pm, up from US88.94c at the same time on Friday.

Imre Speizer, senior currency strategist at Westpac, said the Australian dollar was punished early today after the election failed to deliver a clear result.

The NZ dollar was US70.65c at 5pm from US70.45c at 5pm on Friday.

It dipped against the greenback after the market opened today then slowly recovered for the rest of the session.

The euro hit a more than five-week low near US$1.2660 after European Central Bank Governing Council member Axel Weber said the ECB should extend its loose monetary stance, raising fears of more economic weakness ahead in the euro zone.

Investors also dumped stocks and commodities and piled into US Treasuries in a flight to quality on worries that a US slowdown beginning in the second quarter this year risks dragging the global economy into a renewed slump.

The NZ dollar was up to 0.5554 euro at 5pm from 0.5502 on Friday, and was up to 60.29 yen from 60.06. The trade weighted index was 66.23 at 5pm today from 65.95 on Friday.

- NZPA