The New Zealand dollar popped above 85 US cents as better than expected data contrasted with weaker economic reports in the US and Europe, enhancing the lure of local assets.
The kiwi touched a 10-day high of 85.14 US cents overnight, and was trading at 84.91 cents at 8am in Wellington, from 84.70 cents at 5pm yesterday. The trade-weighted index advanced to 79.66 from 79.50 yesterday.
The New Zealand dollar jumped higher after data yesterday showed second quarter retail sales rose more than expected, reinforcing expectations interest rates will resume their upward path next year. In contrast, US data showing an increase in weekly jobless claims following unexpectedly flat retail sales signalled the Federal Reserve won't rush to raise the benchmark rate from record lows.
Meantime reports out of Europe showed the region's economy is still struggling, as growth stalled in the second quarter, amid weaker than expected data from Germany and France which pushed German 10-year bond yields below 1 per cent for the first time.
"New Zealand retail sales showed a slight beat to the upside coming in at 1.2 per cent versus 1.1 per cent eyed, but what really propelled the unit higher was the chase for yield," Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York, said in a note.